There are a wide range of investment alternatives available for investing. The more common ones are :
It refers to all liquid instruments that bear minimum risk, only that the principal amounts invested can be lost in this type of investments.
These are a group of investment vehicles that offer a fixed periodical return. A fixed income security is a security or certificate which shows that the investor has lent money to the issuer in return for fixed interest income and repayment of principal on maturity.
Shares are different from stock in that a shareholder is a part owner of the company. A company is a separate legal individual, which is owned by all of its shareholders. The value of a share changes according to the market's view of the worth of the company. Others factors too can influence the share prices, like how the country's economy is doing, the interest rates, inflation rates, company earnings, currency performance, etc.
These are useful avenues for small private investors who do not have huge funds or time to receive professional investment management advice. Unit trust investments can generate income in the form of interest, dividends and capital gains.
An investment trust is a company registered under the Companies Act. An investor can purchase shares in that company. The company itself will invest in a wide range of equities and other investments. In a unit trust, the investor buys units in the trust itself and not shares in the company.
There are 3 types of real estate investments such as: the agricultural property, the domestic property and the commercial / industrial property. Properties can provide high capital appreciation and a steady flow of income. Also they are considered low risk investment.
Derivatives are financial instruments whose values are linked to the price of underlying instruments in the stock markets. For instance, a stock index future is linked to the performance of a specified stock market. Stock options and financial futures are 2 popular derivative instruments for investors.
Commodities can be bought as physicals where the goods exist and are delivered right away or as futures, where the goods may not yet exist and will only be delivered in the future. Commodity prices can be unstable as they depend on supply and demand as well as on the other variable factors such as the weather or unexpected pest attacks. For instance, a new pest may reduce a crop, thus greatly increase prices for the crop to be harvested in a few months time. Huge profits can be made from commodity futures and equally large losses can also be incurred if things go wrong.
Life insurance can be closely connected with the national interest because it is a means of reducing financial suffering that death may bring. It is also a method of saving and to a degree, of investing. In other words, life insurance is like a collection of funds into which a large number of policy owners jointly contribute in relation to their risk exposures, in order that a specified sum of money will be paid from the pool of money on the death or other emergencies dependent on human life. There are 4 basic forms of life insurance cover :
· Term insurance
· Whole life insurance
· Endowment insurance
Annuities are contrary to insurance protection against death. It is a contract where, for a cash consideration, the insurer agrees to pay the annuitant, a predetermined sum (annuity) on a periodical basis during a fixed period of time or for the duration of the survival of the respective life. This is done with the understanding that the principal sum shall be considered liquidated immediately on the death of the annuitant.
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