Investing money is obviously a weighty matter.
The question is: where to invest? And what type of investment best serves your needs? Finding the right capital investment that matches your personal ideas is no mean feat. It gets harder yet during low-interest cycles that impact the investment market.
For many investors, the emphasis is therefore no longer on generating the highest returns possible but rather on the preservation of their capital.
But in order to understand the nature of capital investments, you need to know the three mainstays of any investment, a magic triangle of sorts:
Principally, it is safe to say: For a higher rate of return, you need to accept a higher level of risk.
Capital investments are subject to external factors, such as the development of the level of interest rates on the market, currency fluctuations, the solvency of the issuing company, and so on. So your decision in favour of a given capital investment also decides over the degree of risk you are willing to accept.
Some investment vehicles are easier to convert back into cash than others. Indeed, the liquidity of investment vehicles develops in reverse proportion to their return on investment. Those who wish to remain able to access their money any time will be paid a lower rate of return than those who commit their capital for fixed periods of time.
Accordingly, capital investments are divided into short-, medium- and long-term investment vehicles.
- Short-term: 1-12 months
Examples: overnight deposits, time deposits, money market fund, savings account
- Medium-term: 1-5 years
Examples: overnight deposits again, time deposits again, savings bonds, low-risk securities (because the time is too short to balance price fluctuations), bond funds, open-ended property funds
- Long-term: 5 years and more
Examples (low-risk): savings bonds, fixed-interest securities, open-ended property funds
Examples (elevated risk): equities, equities fund, private equity funds
Another major factor in the choice of capital investment and in the decision in favour of a certain investment strategy is the investment horizon because it has ramifications for the safety and profitability factors.
Return on Investment
The term “return on investment” or ROI refers to the actual interest paid on the capital employed. It is based on the income earned from a financial investment (e.g. interest, dividends, realised price gains) and changes in the level of interest rates.
hausInvest – the Bed-Rock Investment for any Portfolio
Investments in open-ended property funds represent medium- to long-term capital investments, and for private investors often the only way to invest in commercial real estate. Real estate investments combine a long-term horizon and a foreseeable, steady income with a low exposure. Investing in hausInvest offers you the benefits of a long-term investment in stable-valued properties with a high tax-free percentage of the ROI.
Redeemability: Redemption after 24-months holding period permitted
Return on Investment: Positive year after year. Since 1972.