Question

If you were going to invest money, given the current financial market status, where would you invest your money today?

What are some possible investment choices for you as an individual? What factors influence your decision on what to invest in?

How does the economic climate affect what you invest in?

Answer 1

- Given the current financial market conditions it is very important that money is parked in such a way that it is safe as well s will yield good returns over a period of time. However the choice of investment totally depends on the risk that an individual is ready to take.If one is thinking about short term investment below are the options you can think about:

1. Saving in Bank- This is one of the safest way to invest, the least riskier investment possible, it will derive a lower rate of interest but is still better instead of just keeping the excess cash at home.

2. Mutual Funds that invest in money market funds- Money market are short term investments are are as safe as saving in bank and also the yields are better as compared to just saving in the bank.

From a long term perspective one can think about the below options:

1. Bonds- Investment in Government Bonds or corporate bonds, there are various kinds of bonds such as fixed, floating rate bonds, zero coupon bonds, Municipal bonds, foreign bonds etc. These are comparatively safer and the rate of interest is also good.

2. Stocks- Stocks are riskier as compared to the other investments such as bonds, however the returns that you receive is also higher, the investments in stock totally depends on the risk bearing capacity of an individual. Considering the market today investment in technology stocks would yield better returns.

- Based on an individual perspective one can consider the below options:

1. Bonds- Money is safe and yields are also not that bad

2. Mutual Funds- Investment in mutual funds is in trend these days, there are various options and types of mutual funds such as the one that invests in equity, fixed income, index, gold, real estate, foreign exchange, etc. A mutual fund that has a mix of equity and foreign exchange would be something that one should consider.

There are various factors that would affect investment decision such as :

1. Risk bearing nature of an individual

2. Interest rates

3. State of technology

4. Availability of finance, etc.

- Various Economic factors affect the investment decisions such as:

1. Inflation causes prices of good and services to rise, whereas in case of deflation causes investors to further invest as there is a drop in stock market.

2. Higher interest rates established by the federal reserve makes money expensive and difficult to borrow.

3. Economic trends in foreign market can also affect the stock market.