In the world economy, where the
lack of preparation of individuals has increased, a successful financial
planning is indispensable. Nowadays, the globalized world has moved through
innovations in the personal management process which are transmitted at the
speed of light. Individuals who live a financially-organized life should be
ready to face these challenges.
There are three main categories
of investment classification products distributed as conservative, moderate and
high-risk level. The primary objective of conservative products is to deliver
an income to the investor with low-risk exposure and low fluctuation. The
benefits of fixed-income products are anticipated redemption and liquidity,
which mean that the invested resource has simple access.
The financial market is quite
sophisticated and there are applications to meet the most varied needs of
liquidity, profitability, and terms. Comprehend the types of financial products
are offered in the market is indispensable to make the right decision in the
financial market.
Conservative Investment Products
Investments in fixed income or
conservative products are generally characterized by the purchase of products
that offer predictability of income. The target market of conservative
investments is tied to investors who require resources in a short period and do
not have a disposition to financial market volatility (Scheuermann, 2014).
Therefore, conservative products offer low investment risk.
The world's fixed-income market
is gigantic in many opportunities for all types of investment for all types of
investors. One of the most important products in this category of investments
is known as Bonds. A bond is a debt security which provides profits to
investors who lending their money to a government or private corporation.
Government securities offer lower market risk at global levels. However,
corporate bonds may offer greater risk since they are tied to the company’s
financial situation.
The essence of government bonds
is to offer the profitability which is linked to government risk. The greater
the risk of the government is, the higher the risk of the title. On the other
hand, the lower the government risk, the lower the risk of the title (Fabozzi,
2014). In the United States, Canada and Switzerland bonds offer the highest
levels of security in the global financial market.
Corporate bonds which provided by
private companies should be chosen strategically by prioritizing stable and
high level of reliable companies in the market. For instance, Exxon Mobil,
Microsoft and Johnson & Johnson. Corporate bonds are analyzed by
international rating agencies which are responsible for studying their
financial situation in the market. It is meaningfully strategic examining the
rating evaluation of the companies before the purchase of the title.
Other Ways to Invest in
Conservative Products
To be specific, bonds are characterized
by the payment of periodic interest and repayment of the invested value on the
date of redemption of the title. Other investment products that are also
conservative are known as Certificate of deposits – CDs and savings accounts.
These investment products are also indicating for investors who seek for the
protection of the invested capital and low volatility.
A certificate of deposit - CDs is
a time deposit. One fundamental insight of this investment guarantees the
invested value and the yield to a certain limit. The payment of interest varies
and may be monthly, semi-annual or annual. The profitability of CDs varies
depending on the bank and term which the application is made. Generally, the
longer the application period, the greater the income offered to the investor
(Camp & Haney, 2014).
Savings accounts are defined as
an interest-bearing deposit account held at a bank or another financial
institution. Interest rates vary from account to account, from bank to bank,
and from currency to currency. Saving accounts’ yields are not the most
attractive on the market. However, they provide the redemption of the applied
asset at any time.
Bring It All Together
The financial
market is the environment in which individuals and institutions trade
financial products. Also, the financial market is exposed to adjusts that may
occur in the world’s economy. Thus, recognizing the strategies to compose the
portfolio of investments are fundamental.
Hi. I’m Designer of Blog Magic. I’m CEO/Founder of ThemeXpose. I’m Creative Art Director, Web Designer, UI/UX Designer, Interaction Designer, Industrial Designer, Web Developer, Business Enthusiast, StartUp Enthusiast, Speaker, Writer and Photographer. Inspired to make things looks better.
0 comments:
Post a Comment