Investment is a must for everyone, to protect you against future financial risks. If you are working in a foreign country, the need for you to stay invested is multi-fold. The uncertainties in the global political, social, and economic scenario, along with currency exchange and commodity market volatilities can definitely increase your financial risk levels.
Investment does not mean, depositing all your money in any one source and then staying put. You need to have a well-diversified investment portfolio. After you send money home, you need to divert enough money to your investment account, so that your investment process can be easily facilitated.
Wondering what an investment portfolio is? It is a collection of investments from various financial products. The intention here is to avoid and balance potential risk factors. A seasoned, good investor is one who understands this. They are cautious and never put all their eggs in a single basket. Their idea and appetite for risk may vary from aggressive to completely meek or defensive. Based on their risk sensitivity, they invest in specific financial instruments. Ensure you connect with the best wealth management company, who can explain these portfolios in detail and help you make the right choice. Wealth management companies will also monitor your investments and keep you updated about them and help you control your finances.
Classification of investment portfolios
An investment portfolio itself can be classified into several categories based on the overall nature of the products it contains. However we can also classify investments based on a person’s risk tolerance. The spectrum of risk tolerance begins from an outright aggressive portfolio to a completely defensive one. An aggressive portfolio contains high risk/high reward products such as equity, forex, options, Real Estate Investment Trusts (REITs) etc. Stocks in this category are very sensitive to the volatile global conditions. So risk management is an integral part of maintaining an aggressive portfolio. On the other hand a defensive portfolio contains products such as debentures, government bonds fixed deposits etc, known for their stability, lesser risk and lower returns. However to a wise beginner, the mid way path is the best.
Don’t know where to invest your money? Here are a few investment options you can try.
National bonds and saving certificate
National bonds and savings certificate is one of the safest investment options available. Issued by the government, the national bods usually have a fixed interest rate. Savings certificates on the other hand are issued by reputable regional banks and they too have a fixed rate of interest. The maturity periods for both can be short or long term.
The bullion market is a lucrative physical precious metal investment. This is a great way to invest your money and diversify your risk. Consider investing in precious metals such as gold, silver, platinum, palladium etc.
When a company is publically traded, it is valued in small units called stocks. Stocks allow stock-holders to own a share of public corporation. Stocks of blue chip companies are known to be stable and give good yield in the long run. The key for any successful investment is to stay invested for a long term.
Mutual fund is a professionally managed pool of funds from different investors. Investment is done in products such as stocks and bond. These mutual funds are very useful to the general public, who have lesser expertise or knowledge of how the stock market works.
Initial Public Offering (IPO)
IPO is the first sale of stock by a company that’s opening to the public for the first time. Any portfolio will benefit from buying these stocks, because the companies usually listed are well run and profitable. If the investor/ financial planner feels that the company is going to perform well in the long-run, after all the analysis and research, then it is cheaper to buy these shares early on.
Exchange Traded Funds (ETF)
Exchange Traded Funds are traded on Public Exchanges and allows you to trade exactly like you would buy and sell a stock. These funds enjoy higher liquidity and lower fees than mutual funds. Hence they make an attractive investment alternative to individual investors.
The above mentioned investments options are only the tip of the iceberg. There are several other instruments that make up a successful investment portfolio. Before you begin your investments, gain good knowledge on the same and then go ahead!