may be greater than the annual interest rate earned on a similar sum of money in a savings deposit account. However, companies can also make losses and may be unable to afford to pay a dividend.
(b) Property market Some people invest their money in buying property in addition to their home. They may rent out this property for income or hope that the property will rise in value. If so, the property can be resold at a larger profit than would have been generated if the money was just sitting in a bank account. However, the value of such investments can decrease if property prices fall or if the property suffers damage.
(c) Insurance companies Endowment life assurance policies are a form of investment that you buy from a life assurance company. The life assurance company invests the premiums received from you in the stock and property markets. In return, you receive a share of the profits from these investments when the policy matures. It is similar to a fixed-term savings account but without any guaranteed interest rate. Endowment policies can have good returns if you are prepared to wait 20 or 30 years for a return. However, the value of these investments may decrease if share market prices fall.
Investment Tip If you have money to invest, don’t put it all in one place. Wise investors spread their money and the risk by investing in a variety of places.
5. How can I select the most suitable means of saving or investing?
Savings and investment options can differ in important ways. To choose the most appropriate savings or investment scheme you should consider the following:
