Choose the Right Type of Investment

By | September 14, 2014

finance tipsOften we see that someone who has a bigger income but assets or property are less than everyone else who made less. One reason is that extravagant lifestyle and without calculation, so that little or no part to save. If you are planning to save money, there are several options offered. Alternatively, you can also consider to start investing.

Investing means we invest some money or buy an asset with the intent to obtain advantage. In investing there is always a risk of loss that may be experienced. An investment that can provide greater profit opportunities, it will usually be followed with a greater risk of loss as well. You should know the benefits that come along with the risk of loss that may be suffered.

Type of Investment

In general, assets that can be investment advice is divided into two, namely real assets and financial assets. Real assets are assets that are owned and has a shape that we keep or possess. An example is the home of real assets, land and gold. Meanwhile, an intangible financial asset, usually just a paper that is proof of our ownership. Examples of investments include savings accounts, deposits, mutual funds, bonds, stocks, gold, property, and more. Now, let’s see what are the advantages and disadvantages of each type of investment.

Savings

Saving money in the bank to be used later if needed.

Advantages Savings

Can be taken at any time and has no risk.

Savings Losses

Money can be easily reduced, as it can be taken at any time with ease and little interest.

Deposit

Saving money for a certain period, if not maturity money can not be taken or will get a penalty if taken before his time.

Advantages of Deposit

The risk is very low. Flowers that can be received is greater than regular savings.

Disadvantages of Deposit

Gains or interest earned less when compared with other types of investments that deal directly with the market risk.

Mutual Funds

It is a place to collect funds collectively. The money raised will be managed by the Investment Manager to be invested in other investment types. When the profit or loss will be divided equally to the investors. This may be an option for those who are just starting to invest. Different types of risk, depending on the type of risk that is selected. Type is a money market mutual funds, fixed income funds, equity funds, and mutual funds mixture.

Advantages of Mutual Funds

No need to have a lot of knowledge, because it is managed by the Investment Manager. Due invested a lot of places, so if there is a loss in one place could be saved somewhere else that might make a profit.

Disadvantages of Mutual Funds

For some people, because it is not managed themselves often dissatisfied with the results. The advantage is less than stock and there are costs incurred for managers.

Bond

Bonds are debt securities, is proof that we are providing loans to certain companies or governments. Debtor will be paying interest for a certain period. Debt repayment period of more than one year. The safest bonds are bonds or debentures of the country.

Bonds Gain

Flowers larger than deposits.

Bond Losses

Long term (> 1 year), so it can not be thawed when needed, or if you want to invest another. If the debtor insolvent, meaning it can not restore its debts.

Stock

Having a stock means you have ownership in a company. The money we invested serve as the capital for the company. The company will provide benefits earned to shareholders is called dividend. When a good or a lot of people who are interested to buy shares of a company, the price will go up, so if you sell the shares will benefit. Conversely, if the company suffers losses, its share price may go down so that you could sustain a loss. Shares can be purchased at a securities company. For each sale or purchase transaction, you will be charged.

dividend

Can bring in huge profits if the stock price rises. With little capital, can be obtained the results many times.

Stock Losses

Greater the risk of loss, when the stock price fell.

Gold

Gold prices tend to rise every year, which is why many people are buying gold and then sell it when the price goes up. If you want to use for investment, gold should be purchased in the form of bars or coins of precious metal than gold in the form of jewelry. Gold bullion or coins not experience shrinkage or cost of manufacture is usually worn when we sell in the form of jewelry.

Gold Gains

Is the liquid assets or assets that are easy to sell.

Gold Losses

Difficult in storage because if not careful can easily be stolen.

Property

Just like gold, the price of the property is a house and land tend to rise. By purchasing the property, and sell it in the future will be profitable because the selling price has gone up. House prices will quickly rise if the strategic location or proximity to public facilities, this may be a consideration when choosing the location. When going to buy a house in housing yet or still under construction, ensure that the developer can be trusted and their agreement clear, because there are some cases, after we pay, housing construction was discontinued resulting in losses.

Advantage Property

Little risk and can be rented out so that it can provide extra income.

Property Losses

Need funds to buy a house or land. Property is not a liquid asset because it is not easy to sell a time when the need of money.

Also consider when you want to take back the investment, if only for a short period or for a long period of time. If you have any need in the near future, choose investments with low risk and liquid. Meanwhile, for the long term, you can choose a high-risk investment that can give greater profits.

Because investing has risks, it is necessary to prepare mentally when a loss or failure to not be discouraged. At least, invest better than all of your income used for expenses without any parts are stored.