Tuesday, July 24, 2012

A Few Investment Options

The prudent investor always analyses the pros and cons of any scheme before putting his money into it. The following are some investment options that he could consider carefully:

Investing in real estate like a house, apartment or a villa is quite rewarding. You may purchase it for your own or lease it to others as a landlord. In the latter case, you must have it in you to face any dour -faced or brazen tenant who refuses to pay the rent; you may have to force him to leave the place; many a time by physical means, if the need arises.

Evaluate the various insurance plans. Some insurance plans not only involve modest installments, but also ensure death benefits. A few insurance plans that give you lifetime returns can be considered. Annuities and whole-life insurance are some popular choices of many. In case of Company retirement plans, funds are generally tax-deferred.

You could deposit your money into checking accounts. As this account is easily accessible, you can withdraw it anytime. But if you keep it there for a considerable period, in the long run, you stand to lose interest on this money which you would have gained had you deposited it in some other better option. Similar is the case with savings account. Here also, withdrawal is fast but it would not be advisable to keep a large amount of money for a considerable period of time in this account as, once again here, you will not earn interest on your money as much as you would have got if it would have been kept in a fixed deposit or the- like account.

Investing in a Money Market Account in the bank gives better returns that that in a savings account, but the investor has to consider that this account requires a minimum stipulated balance and a maximum number of withdrawals and hence is not as flexible.

Investing in Certificates of Deposit gives you returns on the amount for the pre-specified period, with rates of interest better than those for savings accounts. The disadvantage here is that you have to pay penalty for pre-mature withdrawals, but your money is secure here if the deposit is held by a FDIC bank and the balance is within $100,000. Similarly, U.S. Saving Bond investments involve keeping the money for a fixed term and earning interest on the same for the kept period, without paying any state income taxes on the same.

When corporation requires funds for a new forthcoming project, it issues bonds so that money can thus be raised. When you purchase such bonds, you get interest on the money over the period kept for and as per the prevailing rate of interest. There are no taxes on such an interest.

Another good option is that of investing in mutual funds, where one can periodically add more money to the amount initially invested. Funds can be shifted between many investment assets, which is the reason why this type of flexibility is so preferred by many. The fact that management of this type of investment is quite professional also adds to its importance.

There are myriad investment options available. You have but to evaluate and act wisely.

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1 comment:

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