Brought to you by CFA Sri Lanka
If you let your money sit in a bank, you are missing out on money-making opportunities.
While investing your money may seem a daunting task, it need not be complicated. Smart investments will help your money work harder for you.
Let’s begin by understanding the types of smart investments you can make. There are four basic options that are readily accessible:
Fixed deposit (FD) is a fixed income investment. Money is invested for a fixed amount of time. The interest on the investment depends upon the amount of money invested and the duration of the investment. Interest is earned either in monthly payments or at the end of the investment period. You could also choose to reinvest the interest along with your initial investment. The interest is then compounded and the investment will grow depending upon the rate of interest.
When you invest in stocks, you own a ‘share’ of a company. If the company makes profits it may choose to share the profit as dividends. You can also make profit by selling your share when the company’s stock value is high. Stocks can make more money than fixed deposits but there is a greater risk. The company’s stock value can fall or rise. This risk can be managed with good advice from a qualified investment professional.
Real estate is one of the oldest types of investment. As an investor, you can buy property or land. You can earn rent or increase capital value and sell the property when the value is high.
All these investments require some amount of research and you need to monitor their performance. If you don’t have the time or feel unqualified to do this, you use experts who can invest on your behalf.
Unit trusts are funds that contain a pool of money from various investors; yours and others.
Investment professionals, researchers, and analysts manage these unit trusts. As an investor, you can choose to invest in pre-packaged investments such as stocks, fixed income investments, or a combination of both.
By making smart investments you can make your money make more money. If you have questions about making investments, get in touch with a qualified investment professional registered with a local regulator.
This article was brought to you by CFA Sri Lanka, in partnership with CFA India, Pakistan and Bangladesh, as an initiative to increase the level of investor education in the South East Asian region. To learn more visit https://www.facebook.com/UnderstandInvesting