When you have money to invest there are a few things to consider. Before you even start to contemplate what to invest in, you should ask yourself the following questions.
~ Am I investing a lump sum or am I going to spread the money over a period in a monthly saving? If you are investing a lump sum it is important to chose more than one investment option as you otherwise would put all your eggs in the same basket. The risk would be a lot greater than when you diversify your portfolio. If you on the other hand is considering a monthly saving scheme to build up a portfilio you are investing at both highs and lows and so are reducing the risk.
~ When do I need this money? Is this going to be a short-term investment or a long-term one? Depending on your answer your investment options varies. If you need the money within a short term then you should consider an investment option with low risk such as a fixed rate savings account or government bonds. If you can spare the money for a longer period then you can chose options with greater risk.
Once the above is answered there are a number of options available to you. Starting with the once with lower risk and easiest access.
~ savings account. The interest rate varies depending on the terms of the account. It could be a regular savings account or a fixed term one.
~ government bonds. These are available for a fixed term and you get your interest at maturity.
~ mutual funds. These are available as both short and long-term investments. You have mutal funds investing in both the stock and the bond market, others with higher risk investing only in stocks. You can chose fifferent sectors where for example pharmaceutical companies is regarded a safer investment than one in IT.
~ you can invest in the stockmarket yourself. It is the advisable to diversify and spread your risk among at least 10-12 companies.
~ real estate. You can buy a house or an appartment as an investment. If you rent the place you the you will get a steady income. If the market sees a steady increase in prices you will realize your winnings when the place is sold.
~ art and collectibles. Another way of making an investment is to purchase attractive collection of arts and other collectibles. This require knowledge and expertise.
~ derivatives. There are a number of other financial instruments to use when making an investment. You can buy or sell options of a different variety, use hedging or swaps. You can go long or short. These derivatives don`t just make investments instocks, but in interest rates and products.
As you can see, making an investment is a commitment which requires a lot of thought. If you don`t know what to do with your savings, than a financial planner is there to help you make a decision.