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Types of investment

Where to invest money

What types of investment do you know? There are some spheres which can be useful for a good investment. They are: an investment in the stock market or in bonds; pension investments or invest in startups etc. Let’s consider the main types of investment and their advantages and disadvantages.

 

Investment in the stock market

This type of investment implies the security trading which can be realized by investor or by professional traders. Each of them should use some financial instruments: public bonds, bank deposits, banker bills, shares of the enterprises and derivatives. But investors can’t trade on the stock market, and they have to employ brokers. So there are some advantages of this type of investment:

  • a low initial contribution (about $500-1000);

  • the possibility of trading at home;

  • high dividend yield;

  • the minimum of risk.

Also, there are some disadvantages:

  • securities can lose its value;

  • it’s necessary to employ brokers;

  • the political influence on pricing.

Investing in bonds

Bonds are the bills of debt from the government, a municipality or a corporation for an investor. In this case he invests at interest. The bonds have a term of existence. They can be short-term (1-5 years), medium-term (5-10 years), long-term (10-30 years) and with no fixed term. At the end of this term the emitter gets back the face value of each bond. The main advantages:

  • reliability;

  • flexibility;

  • liquidity.

The main disadvantages:

  • the low yield.

Pension investment

Workers can invest his investment part of  state pension (which is 6%) in the government management company or in an occupational scheme.

The main advantages of investment in the last ones:

  • profitable conditions of investment;

  • absence of costs;

  • safety.

The main disadvantages:

  • a risk of addressing oneself to swindlers.

Invest in gold

The gold investment implies the opening of an impersonal metal account for purchasing and selling of gold after its cost increasing.

The main advantages:

  • gold is a liquid asset;

  • the ability to get metal at any point;

  • there is no special conditions for the gold keeping;

  • this metal doesn’t get spoilt.

The main disadvantages:

  • not every investor can afford 18% value-added tax.

Investment of insurance reserves

Insurance reserves are the money which policy holders give for the different insured events paying. This money we pay for our safety. But if an insured event doesn’t happen, some of the money can be returned. Lots of assets can take part in this investment process.

The main advantages:

  • profitability;

  • liquidity of the acquired assets;

  • ability of money returning.

The main disadvantages:

  • reduction of insurance rates leads to a profit crunch.

Investing in funds

Investment funds accept capital expenditures from private individuals or from legal entities. This process implies keeping and increasing of the aggregate capital for the investment by way of securities buying.

The main advantages of this type of investment:

  • low cost;

  • low maintenance charges;

  • broad market diversification;

  • full investment in a portfolio.

There are some disadvantages:

  • impossibility for raising the bar;

  • a strategy doesn’t react to the market;

  • a portfolio limits itself to a company index.

Invest in startups

This process implies an investing of a new corporation for the purpose of the profit earning. The main investors are venture capital trusts.

The main advantages:

  • high profit;

  • it’s possible to choose and estimate any chances of success.

The main disadvantages:

  • low interest of management;

  • high risk of loss of money;

  • increase in the amount of investments.

Invest in business projects

An investor can assign means for a project realization or he (she) can become a joint owner. In the first case the investor trusts and then gets his money back with interest.

The main advantages:

  • minimal losses;

  • option;

  • an investor can be a joint owner.

The main disadvantages:

  • risk of money losing;

  • prolonged period till the profit earning.

But to invest your money profitably you have to understand their operating principles. This process needs time and strength. So you can use
investment sites for the successful investment.




13.11.2017
5 / 5. Total votes: 141