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Table 1. General Investment Options
In addition to cash, savings or fixed deposits are the most popular alternative among investors considering their low risk nature. Another advantage is the liquidity factor. You can easily withdraw money from an ATM machine or the bank when you are in need of money. Fixed deposits also offer higher interest rates but you need to deposit a specific amount of money for a specific time frame. However, fixed deposits are no hedge against inflation. Rather than depositing all your money in a bank, you can invest a certain percentage directly in stocks, bonds, or indirectly through managed funds to enhance your diversification. The investment world offers a wide spectrum of golden opportunities and it is important that you know how to capitalize on them. Many are able to combine the advantages and disadvantages of different type of investments by diversifying. Stocks, are another popular form of investment. It is riskier than other types of investments as stock prices move up and down driven by various considerations. Stock investments are attractive for capital appreciation. Bonds are a form of loan to the issuer who issues the bonds to raise money. They pay a fixed rate of interest to the buyer either annually or semi-annually throughout its life unlike a fixed deposit. They are generally a very secure form of investment since the interest payable and the final redemption price are fixed and the issuer of the bond must repay the principal upon maturity. When looked at from an income perspective, bonds have an added advantage over fixed deposits as a bond investor can enjoy capital appreciation as well as income yields. Bonds however are sensitive to interest rate movements. Higher interest rates shrink the price of bonds. When interest rates increase, the price of bonds will fall resulting in a fall in the capital value of the bonds and could erode the yields made and vice versa. Managed fund investments such as unit trusts tend to grow over the long term. They are a less expensive way to invest in volatile stocks with potential for attractive rewards. A unit trust pools money from many investors to invest in a portfolio of stocks. As a unit trust has a larger pool of funds to invest in a diverse range of stocks, it allows individual investors to literally own a variety of shares with a minimal amount of capital. Managed funds offer investors diversification and professional money management. In other words, investors do not have to worry about market volatility themselves. They just leave it to the professionals to do the job for them.  Any investment portfolio should be made up of different types of securities. Assume that now you are familiar with various investment choices. You may question yourself - stocks, bonds or fixed deposits? Your portfolio's asset allocation depends on your individual investment profile. You should take into account your income, expenses, age, health, risk tolerance and etc. In uncertain market conditions, most investors would normally prefer a well-balanced portfolio - that is a mixture of different securities. The main point is that investors should not totally discard investments during hard times. Just as you should not stop spending all together when the economy is suffering from a few hiccups, you should not withdraw from investing totally. The economy needs demand before it can supply. The key is to spend with prudence and with your investments, be conservative and cautious when formulating your portfolio. Donít over react and put "all your eggs in one basket" no matter how steady that basket looks. Those who diversify and spread their risks are more likely to make better returns. Seek independent advice from professionals if in doubt. Lastly, you need to be patient to see your money grow don't expect to be a millionaire overnight.
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