Guaranteed Return of Investment?
December 3, 2007
I have a friend who’s asking what would be the best investment nowadays. She is aiming for a 7% annual interest, and is willing to give a big amount provided her money will earn much.
Of course, she will not invest her money if there is no guarantee of interests. There are banks offering a lot lower than 7% so putting her money in the bank is no longer an option. Even though she can be assured her savings is being taken cared of, she is not contented with what the bank can offer. She wants consistent 7% earnings.
In reality, there are only two types of investments. First, you can loan your money to someone else and have him pay it with corresponding interest. Interest depends on the length or maturity of the loan. Examples of which are money funds, corporate and government bonds, Bank CDs, etc. Consider that you might not get the interest promised or even your money back if the borrower will not be able to pay. Also, it is possible that the value of your money will diminish due to inflation by the time it is returned to you.
Second, you can buy things or properties that you think would have bigger value in the future. It can be gold or jewelries, real estate, collectibles or anything else that might have great value increase later on. It is the same as leaving your money in a storage like a fruit waiting to be ripe.
You might also consider putting up your own business, or simply buying stocks in a big corporation. These steps, however, does not guarantee interest on your money, and not even your investment back. But if you will be able to make it big, then you will not only hit your target, may even earn as much as 30% income on the first year.
To keep your money safe, and to keep yourself from being bankrupt, it would be best if you just divide your money on different investments. Let’s say, 20% of your money to the bank, 30% to stocks, 20% on real estate, and 30% on your own business. It will be up to you to divide it strategically, in a way that one will compensate the other. Who knows, You may not be able to make to hit the targeted interest on stocks, but might get double on real estate.
It is still best to keep on trying new steps on how to earn interests on your money. Always observe and know the details. Analyze possible consequences before giving out any amount. Because in the end, it is only you who can make more out of your money and not anybody else.
