All About Investment: Complete Guidelines for Beginners

Even if you are not running a business or willing to become a billionaire still the necessity of investment can’t be avoided. The main purpose of investment in securing the future. Besides, a wise investment decision assures you about good return, which will fulfil the requirement of the fund in an emergency situation.

While many people fear investing liquid funds, instances are there where lots of investors are already satisfied after having the taste of profit. So, if you among them who wants to invest money but unable to allocate the fund? Or are you fear of the word ‘investment’ itself whenever a sales guy pitched you about their policies? Or, are you not even satisfied enough after hiring a financial advisor with their decision?

Then, you are exactly at the appropriate place. We are here to guide you all about investment so that you can review the decisions of financial advisors before signing an agreement.

Beginners guide to fund allocation

Before we start, it should be clear to you that there is a certain category of investors. Now this category plays an integral role as based upon the types of investment plan can be selected. Moreover, before proceeding further, you need to decide what type of investor you would like to become.

The relation between risk and return is very comprehensive. Based on risk, investors are categorised. Generally, after a brief analysis, experts found out that there are 3 types of investors witnessed. Such as:  

• Aggressive Investor
• Moderate Investor
• Conservative investor

Aggressive Investor – They are considered to take high risk for high return. They usually invest funds in those investment instruments of the market, which are highly palpable.

Moderate Investor – They would like to take the medium risk for average return. Generally, these investors would like to invest the funds in the market through those investment plans where the chance of losing principal is less than the previous one.

Conservative Investor – They are supposed to be investors who merely take the risk and would like to invest their funds into a secured plan where the chances of return are confirmed and no question of losing fund. However, the return can’t be as good as high-risk plans in such an investment plan.

I hope now you have an overall idea about a different category of investors. After identifying a suitable category, now it is time to invest money. Let us see some popular investment plans based on this risk factor.

Investing money in a savings account:

With the ease of banking, now almost everyone is associated with a savings bank account. An account holder can easily deposit any amount of money in his account. There is no maximum limit.

Banks provide a certain extra rate of interest yearly on the total amount that remains in an account. For example, saving money in a savings bank account bank will provide you 3% interest rate every year.

Here the rate of interest is determined as profit earned by an investor. But as you can see, the profit will not be a noticeable one. It is a secured investment.

Until you are keeping money with the bank, it will be secured enough as the motto of the bank is to provide ultimate security to the depositors. Therefore, by depositing cash into your bank account, you can become a conservative investor.

Investing money in government bonds:

Bonds are composition of both owe and investment. Through this investing instrument generally an investor agrees to lend cash in the form of quick loans which is indeed popular in Ireland. But the purpose of lending is much bigger than a personal loan. Generally, investors of this category are usually eager to mitigate the requirement of fund from large corporate bodies and government organisations. With a stable rate of interest, a lender wishes to invest money to solve cash requirements.

Here the borrower usually fixes the interest rate, and the lender has to agree with the percentage given. As the borrowed fund is a really big and huge amount of money is invested, return out of the investment is quite high. While investing in government registered bonds is quite secure, private bonds might offer one high-interest rate but are not secure.

Investing money in a mutual fund:

It says, ‘Investing in mutual fund is subject to market risks. The undeniable factor with a mutual fund is its high-risk factor. The more one can bear risk, the possibility of earning a high return will also become huge. Actually, it is a type of investment where an investment pool has been created, and several aggressive investors pour their money into the pool. In return, they buy securities or shares of different company.

Although people assume mutual fund is associated with risk, a person is appointed to manage portfolios. The main job role of this portfolio manager is to take care of the pool of fund and a proper allocation of that huge fund into bonds, stocks and shares. To have a sound investment, a person should buy at least 15-20 shares of a company. However, a person can even start with a single share too.

To buy shares at a low rate and sell them at a high price is the primary motive of shareholders. Investment in MF can be worthy when you need some extra fund.

Investing through ETF:

Exchange-Traded Funds, which came into existence in 1990, continuously serve as good investment instruments. It is quite similar to MF. However, the only difference between MF and ETF is they function only throughout the daytime. It majorly focuses on the trading of stocks.

For instance, if you want to buy a wonderful car, you can either search for car loans in Ireland or make use of that extra earned profit from a mutual fund.

During its trading time, the worth of stocks ups and downs rampantly. Therefore, if you are such a type of investor who loves to enjoy trading during the daytime and want to earn a high profit, then investing in ETF just perfect for you.