Thursday, July 31, 2014

Are There Any Permanent Safe Investment?

Alright,so the question has been pondered a long time ago by many experts and investors. Do we truly know what and how can we invest our money safely? We do know what sectors to invest for now, but do we truly know what the future might holds? The global recession took place in 2009. Back then, almost everyone think that the morgage market was the safe investment. Everybody is happy, everyone gains. Obviously that was not a sustainable model, with the high risks investment and brought up potentially large sum of money could lure anyone to think that his or her investment was safe. However, that was not the case. The Credit Default Swap (CDS)caused investors to think that they were going to earn a large amount of money. In fact, they were only rich in useless paper with a lot of debts became default. Well, a lot of conspiracies in this event. Back to the question, the answer is not easy to answer. From the example above, what was thought to be a safe investment with high profit did not maintain that status for a "permanent" period of time. To a certain extent, investment can be safe with the combination with bonds and stock. On one hand, bond is stable, but it was depreciated during inflation of the market. However, stock can helps you with that and balanced out the risk of inflation. On the other hand, stock goes up and down, but bonds can help you to prevent the risk. But what if the economy is stable with low risk of inflation, a lot of giant investors (student's loan, foreign investments - US, China, Japan)for safe investments choose bond market. The return of bond is highly predictable with low risk. So make your choice, kind of hard is it? Remember, there are always posibility for risks. You might choose bond over stock, but remember one more thing, "Don't put all your eggs in one market".

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