Investment is not something that one should just jump right into without proper planning. If you are looking for the right types of investment ideas that still work this 2020, it’s the perfect time to start.
There are several aspects that you need to take into account in order to avoid the same mistakes that many investors have committed in the past. These errors could have been easily avoided had they paid attention and allot ample amount of time preparing.
Preliminary considerations
Before you can even choose which type of investment perfectly fits your needs, you have to take into account some preliminary questions. How much are you willing to invest? What is your risk tolerance? Or what are your passions or interests? These are just a few of the questions you need to answer.
By knowing these information, you’ll get a clearer idea on which investment would fit you. You can also narrow down your options by answering these vital questions.
Types of investments
Investments can be subsumed under two categories such as defensive investments and growth investments. Each category offers different features and levels of security. When choosing between the two major classes of investments, you need to take note of the aforementioned preliminary considerations to fully maximise your investment and avoid unnecessary stress.
Defensive investments
These investments offer lower risk and aim to provide security to the capital investment. Common types of defensive investments include cash and other fixed-interest investments.
Cash investments are a good way to protect financial wealth, while fixed-interest investments are designed to bring a steady stream of passive income.
Defensive investments are ideal to beginning investors as they do not require a lot of cash or capital to start, hence, they are a great way for hitting short-term goals. In addition, defensive investments are a great way for people looking at diversifying their investment portfolio.
Some of the common types of defensive investment options include:
- High-yielding bank accounts (personal savings and time deposit)
- Government bonds
- Corporate bonds
- Debentures
- Capital notes
Growth Investments
Unlike the defensive investments that feature relatively conservative risk and low returns, growth investment, on the other hand, offer higher returns, but can be very risky.
If you have higher tolerance for risk and aspire for high returns, growth investment options are a great way to explore. As earlier mentioned, they are optimal ways to diversify your investment portfolios. Common types of growth investments include property, shares, and alternative investments.
Investing in a real estate property, whether residential or commercial, offers a steady stream of passive income and capital growth. It’s ideal for people who have saved well enough cash as it requires relatively big capital.
If you want to get a voting right for a certain company, you may want to consider investing in shares or stocks. It also offers capital growth and dividends to investors.
Here some of the common examples of growth-driven investments:
- Residential or commercial real estate
- Shares/stocks from a company
- Private equity
- Infrastructure
- Commodities
Before choosing between protective and defensive investments, it is a must to take into account those factors that all beginners or even seasoned investors need to consider. Working with an expert who can walk you through the entire investing process is another option that you can try. You can talk to one of our trusted colleagues today about your future planning needs.
