Savings And Investments
Investing and saving does not have to be a mine field. With a bit of research before you commit to any investments, you can make your assets work for you. Understanding the basics before you choose an investment is an excellent way to start and saving and investing.
There are at least three main points to consider when choosing to invest.
I will try to impart some clarity as to what types of savings and investments are available to the everyday person.
The term asset can be referred to as various types of investment.
There are three recognised types of assets. These include: Real estate of any kind be it your own home, land, property held in trust or commercial and industrial property such as factories. Deposits of cash in personal accounts or bank notes savings held in a bank. Bank or government bonds, any bonds that are invested at a fixed rate.
The above investments are broken up into a couple of larger groups. It is imperative that you understand how these groups work and the level of return and risk that is associated with each group. As each group performs differently to the other in terms of net growth and return.
The first group can be defined as defensive investments. Referred to as defensive as the over risk is lower but still gives you a monthly or annual income return on the investment. This type of investment do not generally increase in capital growth.
The returns on defensive investments usually only increase or decrease slightly over the short periods of time and in the long term the returns can be lower than those of what is termed growth investments as these defensive investments relate to the income from cash invested. ie: Deposits, bank notes and bonds and cash deposited at a fixed rate.
The next group is made up of any real estate or property and any share portfolios or individual stock market shares. These types of investments can be referred to as growth investments as the capital value of these assets can add growth to your income. Growth investments however tend to rise and fall rather dramatically over short periods of time.
As we have recently seen with the world's stock markets. Although these growth investments can fall in the interim the returns that can be gained as a long term investment can be just as dramatic. These types of investments will still outperform the defensive investment maybe not in the short term but in the long term.
This is a way of assessing the risk and return that you may experience with investing in general. The more return on your investments the more risks can be associated with the investment and vice versa. So the investment terminology of growth and defense are basic terms that you need to understand when looking at investing.
There are at least three main points to consider when choosing to invest.
- The performance of the various types of investments and how they can work for you.
- Understanding the risks involved in the investment and the returns that the investment offers.
- Working out a plan that will diversify your investments to lower the risks and bring better overall returns.
I will try to impart some clarity as to what types of savings and investments are available to the everyday person.
The term asset can be referred to as various types of investment.
There are three recognised types of assets. These include: Real estate of any kind be it your own home, land, property held in trust or commercial and industrial property such as factories. Deposits of cash in personal accounts or bank notes savings held in a bank. Bank or government bonds, any bonds that are invested at a fixed rate.
The above investments are broken up into a couple of larger groups. It is imperative that you understand how these groups work and the level of return and risk that is associated with each group. As each group performs differently to the other in terms of net growth and return.
The first group can be defined as defensive investments. Referred to as defensive as the over risk is lower but still gives you a monthly or annual income return on the investment. This type of investment do not generally increase in capital growth.
The returns on defensive investments usually only increase or decrease slightly over the short periods of time and in the long term the returns can be lower than those of what is termed growth investments as these defensive investments relate to the income from cash invested. ie: Deposits, bank notes and bonds and cash deposited at a fixed rate.
The next group is made up of any real estate or property and any share portfolios or individual stock market shares. These types of investments can be referred to as growth investments as the capital value of these assets can add growth to your income. Growth investments however tend to rise and fall rather dramatically over short periods of time.
As we have recently seen with the world's stock markets. Although these growth investments can fall in the interim the returns that can be gained as a long term investment can be just as dramatic. These types of investments will still outperform the defensive investment maybe not in the short term but in the long term.
This is a way of assessing the risk and return that you may experience with investing in general. The more return on your investments the more risks can be associated with the investment and vice versa. So the investment terminology of growth and defense are basic terms that you need to understand when looking at investing.