Friday, October 2, 2009

Top 7 Investment Opportunities For Retail Investors

In the current environment where global inflation is rising and simultaneously eroding investor confidence, there are still few avenues where investors can invest and reap the benefits in the long term. Investment opportunities explained below are suitable for investors who are looking for value in medium to long term. Be warned though that all investments carry certain amount of risk and before investing your hard earned money, you should seek the advice of a qualified financial advisor or planner registered with Financial Services Board (FSB).

The following are the top seven investment opportunities for retail investors:

Stocks/Equity/Shares - This investment vehicle is known to give very high returns but you need proper training to invest in tradable stocks on the stock market. You can either invest based on your direct research of the market or you can subscribe to the services of a research company that provides proper analysis of tradable stocks. There are many companies in the market that provide such services. There are even websites that give investment tips online but one thing for sure – do not accept free investment tips. Have you ever seen a free professional service!

Mutual Funds - You may want to invest part of your money in the stock market through mutual funds or unit trusts. Mutual funds are less risky proposition for people who want to invest in stock market but do not know how to trade. Go for 50:50 mix of dividend and growth scheme. Currently mutual funds are priced attractively and there are plenty of good investment opportunities. Look for two to three years timeframe for reasonable returns. You may also look for closed ended tax saver or tax benefit schemes in which your money will be locked for three or more years.

Land - With appropriate bank loan or cash payment from your savings or investment portfolio you look can into buying land near developing areas such as airports or commercial centres. This investment can give you high level of returns in the long term. The only problem with land is that it needs to be protected well from encroachment and false suitors. One thing to remember is that lands far from major cities are cheap but yield very little growth and are difficult to maintain and protect.

Under-constructed units from reputable developers – With a loan from your bank, you can invest in a good three or four bedroom unit which is under construction or chosen from a plan of a reputable developer with a stable business. By the time the unit is ready for occupation, normally the price would have appreciated and you can make a good return on the money you borrowed from the bank. Here the emphasis is a reputable developer with good track record, prime location with potential to appeal to many people and good quality units. These aspects will firstly ensure successful completion of the development and secondly appreciation in value once construction is completed. Caution: make sure that you can service you bank loan or bond while still looking for a prospective buyer.

Gold and Silver – Physical gold and silver (especially gold) are traditionally seen as safe havens and preservers of wealth especially in times of uncertainty or rampant inflation. The only problem with physical gold and silver is storage or security. You will have to find a suitable place to protect them from unwelcomed scoundrels.

Bank Fixed Deposit - If you want a highly secure investment vehicle then go for age old bank fixed deposits. With bank fixed deposit, your initial investment is secure but the growth thereof will hardly beat inflation. Also one should not deposit all the money in one bank but diversify across at least three banks to minimise the solvency risk although you can do very little if bank contagion ever occurs.

Government Infrastructure Bonds - This can be a good investment with good future returns more so when looking at government spending on infrastructure, developmental agenda of Eskom and infrastructural developments of metropolitans such as City of Johannesburg. You may also seek the advice of a FSB registered and reputable financial advisor with respect to schemes that are linked to infrastructural bonds or socially responsible investment (SRI) funds.

About the original author:

Arth Sutra provides NSE BSE Trading Tips and Trading Recommendations for Australian and US Stock Markets. Visit us for 4 week Free trial for NSE BSE Stock Tips. Also subscribe to our FREE Weekly Global Market Analysis newsletter for in-depth analysis of stock markets across the globe. Visit Indian Share Market Tips for more information.

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