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Investing - Response to Butterfly 1 October 4, 2008

Posted by mona in : Uncategorized , trackback

Hi,

What do you think is the best instrument for investment. If I have some savings today, where should I put it? (considering that owning a business is not an option). Thank you. - Butterfly

With the recent shakes in the stock market and other related industries like banking and insurance, it’s tough to look for really secure instruments. But if you’d ask me, what’s safe is what’s best.
Over investing in stocks or placing it in “prosperity plans” like that of Sunlife’s, I’m still more comfortable with banks. You could check out your bank for offers of high yield placements.

Here are a few things you need to consider though:

- Check out the bank’s reputation. Savings and rural banks offer higher interest rates than commercial banks BUT they’re more prone to bank-runs.

- Deposits are insured only up to a certain limit. Try not to put everything in one basket. With the way things are going right now and all the unexpected turn of events, it’s safer not to go beyond that limit.

- Choose a term that you’re comfortable with. Of course, the longer the holding period, the bigger the returns. But what if you need the money? Of course there’s always the option to preterminate but it is not advisable because you might just end up losing after all the fees have been deducted.

There some people I know who are investing in real estate, especially now that a lot of properties are being foreclosed by banks and lending institutions. This, however, is for the more “gifted” not only in terms of cash but also in the skill of “predicting” which property would appreciate faster. You can opt to do this if you want to, but remember, a piece of land is just that - a piece of land till it starts earning money for you. Also, real estate is also something that’s very hard to dispose when you need the money right away.