The best types of investment

The best types of investment

What is the best type of investment? In short, the answer is “it depends”. There are a number of factors to be considered to invest a lump sum.

What is the investment of time?

Investment period ends when you must access your equity rather than capital income. In General, if you need your capital for five years, better put your money in investments with a fixed value to avoid the risk of loss.

Do you need an income investment?

Investment income may return (interest or dividends) or gain (increase in value of investments) or a combination of both. Capital gains are usually only available to you when you buy investments. Certain income investments have a fixed rate of return (such as bank deposits or obligations of financial companies) and some have a variable rate of return (e.g. perpetual obligations or fixed interest Fund). Fixed rate has the benefit of knowing what will be the income, while the variable rates offered higher returns, if market conditions favourably change.

Do you want your investments to grow in price?

If your goal is to preserve the purchasing power of your capital or increase your wealth over time, your investment will grow in value less than inflation. A diversified stock or investment portfolio is certainly more likely to achieve this long-term objective, fixed interest investments.

How to invest and other investments that you have?

Investment portfolio total should be shared between the different types of investments to reduce risks in other words, don’t put all your eggs in one basket.

What risk is for you?

Your age, the amount of money, you will need to invest, your personal feelings to take risks are some of the factors that determine what risk you take with your investments. In General, the less risk you take, less return on investment. You need to know what risks are involved with your proposed investment and return reflects the risks.

What is your marginal tax rate?

Investments are taxed differently depending on how they are structured. If you are either low or high tax rate limit, some investment will be tax efficient for you longer than others.

Understand the proposed investment?

Investment products become more complex, than to try to different providers to outdo each other and try to increase the potential profit without increasing the risk. Make sure that you do not understand.

As you can see, the best investment for you is meet all the requirements you have. What’s best for someone else may be better for you. Be clear what your criteria and then is used to evaluate a number of different options. If in doubt, get some good advice!

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