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The best instruments of investing

Nowadays the range of instruments, with the help of which it is possible to keep and multiply the existing funds of an investor, is very wide - real estate, precious metals, art pieces, saving accounts, mutual funds, stocks, bonds, derivatives, currencies and many more. The choice of instrument for investment depends on investor’s personal abilities and preferences.

There is a direct connection between the profitability of an investment and the level of risk that investor carries on - the greater the expected return, the higher the level of risk. The main task of the investor is the evaluation of the risk of his activities and the determination of its acceptable level.

Conservative investments

The conservative instruments of investing are real estate, saving accounts, government bonds and securities of highly reliable companies with a slight increase in the market value, precious metals, etc. Each of the listed instruments practically ensures the investor safety and a slight increase of funds (up to 10% per annum). In addition, savings are hedged, but their profitability is equal to or is slightly above the level of inflation in that very country.

Moderate investments

Moderate investments include stocks and bonds of major companies, bills of commercial banks, investing in mutual funds with a mixed investment policy (with the usage of conservative and aggressive instruments). In case of average profitability and liquidity, moderate investments differ in a low level of risk.

Aggressive investments

The instruments of aggressive investment include stocks, bonds of minor and medium-sized companies, futures, options and currencies. These instruments are considered to be very profitable, but at the same time they are highly risky. Their high volatility often leads to the loss of the capital, but in case of favorable circumstances, it can provide more than 100% annual return.

Non-professional investors should invest in real estate, precious metals, saving accounts and stocks of the highly reliable companies.

If you have decided to invest your funds more professionally, then you will first need to examine and understand the principles of how financial instruments work. Internet trading, which can generate high profits in case of right approach, is considered to be a very effective, but highly risky investment. The attractive sides of this type of investment are the relative simplicity and the small initial capital. In case of the absence of free time, you can entrust your funds to a trustworthy strategy chosen by you, but it has its minus as well, because most often asset management companies set a high threshold of entry (from $10.000).

It does not matter with what you will start your investing activities, first of all you should be aware that in case of multitude instruments in today’s market, there is no such an investment that guarantees 100% security of funds and high return. Only with good knowledge it is possible to find a compromise of risk and profitability.

Garry Berg
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