How to make safe investment?

Rise and fall in your investment value throughout 2011 surely provoke anxiety for many investors who had just started to put money into the capital markets as well as precious metals. Thus, one question that inevitably arise is "what is the most secure investment for me?"

Talking about risk, I am convinced, surely there is always a risk contained in every investment product. For all investment options, you will definitely be dealing with three types of risk: loss of capital, the difficulty of converting to cash, and the loss of purchasing power due to inflation. Among all three of these risks, I am sure most of the young investors or newbie investors will definitely put the risk of capital loss as the greatest risk.

To me, a safe investment must be adjusted to our financial goals. The term 'high risk, high return' should be changed to 'highest possible return with calculated risk'. We must look for an investment product that can produce the highest potential yield for all our financial goals.

First, for financial goal under a year period. Holiday fund for the preparation of Christmas 2012 is an example of short-time financial goal. For this, you cannot tolerate the risk of capital loss due to the arrival needs is certainly in the short term. Therefore, the choice of your investment is savings, deposits, and money market mutual funds.

Second, for the purpose of emergency funds. Emergency funds are only used for unexpected purposes, such as hospital costs, the cost of replacing damaged refrigerator, put into this category. The risk is that we cannot withdraw the investment cash immediately. It would be very scary. Bank saving account is the best place to store the emergency funds. The next option is a money market mutual funds because it can be withdrawn at any time without penalty. But for bank deposits, if you withdraw before its due date, it means you will pay a penalty.

Third, for the financial goal of above one year. College education fund for seven years old children, your pension fund, or funds to purchase a second home, are including into this category. You cannot still use savings or deposits for this purpose.

If your savings just give you 2% a year, while the inflation rate reached 6% a year, then you actually lose 4% of the money. So, although your initial money may be secured, you are losing the purchasing power more than half.

Looking for a balanced combination of financial planning for your financial goals is an art in making an investment portfolio that is "safe" for you. Whatever your life situation, I recommend that you save money on products that the risk of capital loss and liquidity risk is low, a minimum number of 3-month expenditures.

The more risky your job, due to unfavorable business situation or choice of working as a freelancer, then you should enlarge the amount of funds placed in this product.

Along with investing experience, you will understand the performance of various investment assets and risks that may occur. Most importantly, you still feel safe and comfortable in investing to achieve a prosperous life.

Live a beautiful life!

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