When choosing the right investment, it is important to determine in advance which investment objective will be pursued: low risk and high returns?

Potential investors should first set their priorities and ask yourself what is important to them: liquidity, profitability and security, that they are willing to take the risk of loss should the investment be readily available or can be over a longer period of, say, five to ten years money will be dispensed with? Investors, where security is going on high earnings potential should be in no way looking to make financial salesmen that they can offer them risk-free investments with high returns, but always call the iron law of financial markets to mind, which says “the higher the yield, the greater the risk of loss. ” Who it is important, even during the investment period to be able to access the money in case an unforeseen financial emergency occurs, should choose an offer that does not provide for early termination. A money market account to which you have access at all times would be the better alternative.


Investment products with a low risk

Hard Money

For investors who want to invest a larger sum in the short or medium term, the fixed deposit account, the ideal form of investment. The interest rate is higher than the agreed fixed period of time, which gives the customers interest rates fall, an interest rate guarantee. Upon conclusion of customer and bank agree on a fixed term for the plant. That interest rates fall, the investment is not affected, is of course very beneficial. The downside is this: If interest rates rise, the Investor is no way to break the fixed deposit account in advance in order to put his money into a better interest bearing investment.

Savings Bonds

Like the time deposit of the savings bond is a fixed income investment product that has the advantage of a much higher return than fixed deposit. The interest rate for the entire period, which amounts to one to ten years, set by the Bank and may not be changed, which makes the system very manageable. Savings Bonds can be bought back to take them to the savings bond again at almost all banks at a fixed price.

The balanced fund – an investment product with moderate risk

This investment fund will invest in both stocks and bonds (money market instruments, bonds, real estate) at. The mixing ratio is often very different depending on the orientation can be balanced fund track safety-oriented and risky strategies. The advantage of the flexible balanced funds is that it responds to market fluctuations and the stock per share can adjust flexibly to market conditions. According to the Federal Association of Investment Management and Asset Allocation is the timeframe of 20 years at an average yield of 5.6 percent. For more information see the article “The benefits of balanced funds.”

Equity funds – investment product with a high risk

Shares are the most common form of investment, but also the riskiest. On the one hand, investors can achieve very high returns to equity funds, but also suffered very heavy losses. Equity funds collect money from the investors and the fund’s assets are distributed to a variety of individual stocks. The advantage is that is widely distributed in this way, even with small amounts to invest the capital employed. Those who invested in equity funds should be aware of the risks and value fluctuations. In addition, a long breath is important to wait out downturns in the stock market. On the various stock funds informed the financial test of Stiftung Warentest .