Today there are more investment vehicles available to us than ever before. Although it makes it easier to diversify, the challenge of having too many options can be that it makes decisions much harder. The importance of diversifying your investment strategy has been underlined many times. I believe that you should never hold more than 30% of your wealth in a single investment vehicle. This can count for and against you, but in terms of risk-reward a 30% investment is both safe and flexible. When one sector crashes, at least its only 30%. When an investment starts to run, a 30% portion of your wealth can net you a handsome return.
Cash investments is an important aspect of investing and one that you need to take a closer look at. Its quick, its easy and very liquid. It can be tricky though. Here are 3 important things you need to look for.
1. Interest
With any cash investment, your first question should be "what is the interest". This can vary greatly from institution to institution but because its a very safe investment the interest is usually quite low. I would suggest you look into money market accounts as they tend to have the best interest rates.
2. Fees
If your first question is about interest, your second should be about fees. Fees can kill any investment and unless you do your homework it can catch you out and suck up a load of your profits.
3. Speed
One of the best things about cash investments is that you can move your money at the drop of a hat. This is something that no other investment can give you. Unfortunately, institutions don't like that and they've started to introduce "penalties" when you withdraw your investment before its term has expired. Make sure you look into this and know exactly what's involved.
Read more about savings accounts and learn how to get the best saving rates.
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