Money should work, so keeping it under the pillow will not be a rational solution for the user. Today, there are many ways how you can place your savings so that they begin to generate additional income. These can be deposits offered by many banks, government bonds, or stocks of large companies. You can also invest in real estate or precious metals. There are a lot of ways to invest, but a beginner should pay attention to the most well-studied among them, which will allow you to form a balanced investment portfolio.
What types of investment instruments are there?
An investment instrument is an asset that is used by an investor to invest money. The task of the tool is to provide a return on investment. All existing tools can be divided into several groups:
- Instruments for saving savings – these forms of investment primarily protect capital from risks such as inflation. This category includes bank deposits, precious metals, and some other instruments.
- Investment instruments to increase capital – as the name suggests, they should provide additional income. The category consists of stocks of various companies, real estate investments, and corporate bonds.
The first group of instruments is usually chosen by investors who adhere to a conservative investment strategy. Tools for multiplication can be used in the formation of a balanced, as well as risky (aggressive) investment portfolio.
How to evaluate investment instruments?
Today, many companies on the market offer to attract investment for their project. For JKR investment company remains the main focus of work. You can learn about the specifics of cooperation with an investment group by following the link, which also contains information on priority areas for investment.
Before investing your funds using one of the tools, you need to carefully study its features and benefits. For this, there are several key assessment criteria:
- risk and rate of return;
- term of investment;
- frequency of payments.
- minimum entry-level.
Professional investors always assess risks first. The higher the risk, the higher the potential return becomes, so it makes sense to consider these two criteria together. The logical decision would be to choose a suitable risk profile, for which you need to determine your attitude to risk. The willingness to take risks will determine which financial instruments are relevant to the investor.
It is also recommended to evaluate in advance the investment terms and their compliance with the wishes of the trader. For example, you can invest in stocks for an unlimited period, as long as a company that is traded on the market continues to operate. At the same time, corporate or government bonds have a specific maturity.
Income during investment is paid at regular intervals. This can be a one-time payment, for example, if stocks are used to sell them, or regular payments (bond coupons). It is useful to study the entry threshold since for some investment instruments it is enough to have $ 20-30, while others assume the presence of capital from several thousand dollars.