Type of investment that is suitable and profitable

Type of investment that is suitable and profitable

Gealena – What needs to be observed before investing? How do you choose the type of investment that is suitable and most profitable?

type of investment

At present, there are many types of investments that can be chosen to secure our money while bringing profits. Usually, high-risk investments promise large profits, and relatively safe investments have small profit potential. Examples of investments that have a high enough risk of losing money that we invest include stocks, forex, online investment, and several others. While investments are said to be safe, for example, bank deposits and gold. The type of investment you choose depends on you.

investment business Some things that influence a person’s judgment in choosing an investment, if investment objectives (looking for profit or just maintaining funds), the number of funds available, investment prospects, the size of the risk, and the period of investment. Well, before you read about various types of investments that you can choose, it’s good to discuss first the rules or considerations and principles in investing.

Considerations Before Investment

Setting aside a portion of funds for profitable investment capital while still young is a positive thing. If you plan to start investing, then at least these four rules must be understood first.

1. Your Financial Conditions Are in a Safe Situation

You may leave your money for profitable investment provided you already have an emergency fund, smoothly pay credit card bills every month, and other debt installments. If all these costs still burden you, then you should rethink your financial strategy.

2. Understanding the Basics of Investment

Don’t just be tempted by the big results that have been successfully achieved by your friends or relatives in a profitable investment field. In determining investment decisions, you must have adequate insight that you can get by reading books, consulting with financial experts, and so on.

3. Do not consider the investment as a short cut to a rich road

The profitable investment you make must aim at the long term and not be used as a shortcut to get rich in a short time, because usually, it has a big risk. The investment aims to get multiple returns in the next 5-10 years.

4. Determine Investment Options As You Wish

At a young age, one of the most appropriate investment options and the potential to provide high profits is a mutual fund-based stock, not an investment in the form of bonds.

type of investment

A variety of successful stock investment types of investment options, descriptions of advantages and disadvantages

Here are some examples of investments that many people do in managing their finances.

a. Investment in the form of savings

Is an activity to save money in a bank to be taken (withdraw) if needed later on. The advantage of making this type of investment is that funds can be taken at any time and the risk of losing funds is relatively small. The disadvantage is that it does not bring in high profitable investment and the value of money held tends to not be proportional to the value of goods in the following years.

b. Investment in the form of deposits

Is activity to save funds in a bank for a certain period. Funds can only be withdrawn when they are due. The profitable investment benefits in the form of deposits are the interest receive is greater than the savings and the risk is relatively safe. The disadvantage of deposit investment is that it cannot withdraw funds at any time, if done it will be subject to a penalty (cut). In addition, when compared to other investments in the same timeframe, the profit is very small.

c. Investment in the form of gold

Many people choose this type of investment safe, the price of gold tends to increase every year. Even if there is a decline, it’s not too big. The advantage of investing in gold is that it can be sold easily so that you can get funds quickly. Besides that, it also has a function as self-sufficiency. The disadvantage is a risk in storage, especially if stored at home.

d. Stock investment

The stock market Is an investment in ownership of a business/company. In investing in this type, we provide a number of funds (based on stock prices). That will be used as capital for the company to operate. If the company gets a profit in a period, then the profit called dividend will be received by the shareholders based on the number of shares that they have in the company. The advantage of investing in a stock model is that it can bring large profits with only a small capital if the company’s stock price rises. The disadvantage is having the risk of losing a large number of funds. This investment requires us to always follow the movement of stocks to minimize losses.

e. Investment in mutual funds

It is an investment by participating in collecting funds collectively in an investment manager. The investment manager will invest the pool of funds in certain investments. The profits and losses obtained will be borne by investors (funders). The risks to investment vary depending on the type of risk chosen. The advantage of investing in this model is that you do not need to learn much about the ins and outs of various investments. Because it has been managing by an investment manager.

In addition, because investment managers usually invest these funds in many places. Then the loss of investment in a place (company) can be cover by profits at other investment sites. The disadvantage of this type of investment is that we must give full trust to the investment manager who manages our finances. In addition, there is often injustice or dissatisfaction with the results of the distribution.

f. Bond investment

Is a debt that is proof that we give debt to a company. The indebted company will give us interest for a certain period of time. The safest bonds are bonds from the state. Because as long as the country does not disband, the investment will remain safe, but generally has a smaller profile. The advantage of investing in this type of bond is getting a larger interest rate. The disadvantage is that we cannot withdraw investment funds at all before the agreement reaches the deadline and if the company goes bankrupt then we will lose funds.

g. Investment in property

Many people choose property investment because it is certain that the selling price always increases every year. Land and buildings are relatively safe investment objects. The advantage of property investment is having a small risk and can be used for rent so that it can generate income. The disadvantage is that it is not easy to immediately make money especially if the location is not strategic. In addition, investing requires substantial funds.

Short Term Investment

gold bar investment In choosing a profitable investment, one of the indicators consider is the time interval. If you plan to invest your capital only for one to two years, then you have to choose the right type of investment. Investing in the property sector, such as land and buildings, seems to be inappropriate for the short term if the location of your property is not a developing area because the value of the price increase of the investment is not significant so that the profits obtained are less than optimal.

Well, in the opinion of Mega Tiarasari, CFP. MSc which is a planning and financial consultant expert, as reported by Okezone.com. States that for short-term investments (1-2 years), it is generally done with the aim of securing capital while expecting profits.

The thing that remains a top priority is looking for profit but minimizing risk. A reasonable choice for short-term investments includes deposits and mutual funds. If you are interested in investing your money in the form of deposit savings. Then what you need to remember is the amount of interest or the rate of return on bank deposits. At present, the average return on deposits (interest money) is at 7 percent in a year. Each bank or other financial institution has a deposit interest that is not the same, even though the difference is not too far. Therefore, before you deposit your money, it is better to check and compare several banks or financial institutions that offer these investment products.

In addition to deposits, a suitable form of investment choice for the short term is a mutual fund that consists of various types. The best type of mutual fund and usually the choice for short-term investments is money market funds and fixed income mutual funds.

Suitable money market mutual funds are chosen for investments of less than a year. Because most of them put their money in low-risk investment products, such as deposits. While the choice of fixed income mutual funds usually invests in products that have a fairly stable return such as bonds. This type of investment is suitable for financial goals that will be achieved in the next one to three years.

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