Elton John

Types of Investment

There are many types of investments. Mainly classified into four forms of assets:

Brief Description on Different Types of Investments:                            

• Short Term Deposit: Bank's savings account is the simplest form of short-term investment. One of the main advantages of this investment is that, the supplier avows 100 % guarantee of the returns. However, returns offered are low in comparison to other investments, but there is no chance of investment dropping in value like other types of investments.

Short-term deposit offers total liquidity. It means investors can withdraw all their money whenever they need. It is perfect option for short-term savings or emergency funds.

However, it is not a valid option for medium of long- term deposits.

Bank Fixed Term Investment: The lump sum money deposited for a set term usually six or twelve months is locked away by the bank for a fixed period. Here, the investors get higher interest than a straight savings account. Depending on interest rates, this is investment option is the best for medium or short-term investment.

• Bonds:  Basically, it is considered as IOU issued by a company or government. The investors invest money in the bonds for a certain time, to get it back at a particular interest rate.  For a fixed period, bonds lock away the investor’s money. However, sometimes, the investors can withdraw the deposited money for the trading purpose.

Usually, a bond is not an ideal option for short-term investment. Instead of bonds, the small investors are supposed to go for managed funds. It would be good for small investors not to directly invest in the bonds.

• Property:  It is safe and profitable to invest in a property. It is beneficial for long-term goals. Most importantly, the investment without the right knowledge and deft attention is liable to suffer significantly.

Moreover, the losses incurred in property investments are not published. Prior to investing in any property, the investors need to understand and manage different issues and aspects of property investment.

There are two types of Property investments: Direct and Indirect Property Investment.

 Direct Property Investment: The investors have to manage the daily administration such as finding tenants, bond and rent collection, and looking after the maintenance issues. Or else, go for property Management Company that charges fees for these services.

Indirect Property Investment: The investors have options to invest either in managed investment fund or superannuation scheme. Here the investors acquire ownership without need of actually finding the property and doing the hands on management. It offers the diversified benefits for the average investors.

.

• Shares:  The investors are viable to get right share and value of the company, by investing in a company listed on a stock exchange. The investors can assess return through dividends and capital gains. Through shares, investors can invest in vast range of companies operating in different regions and can make benefit of long-term gains.

Source: Free Articles from ArticlesFactory.com

ABOUT THE AUTHOR