Discovering investment options (Part 2)
For many people, a big cash injection such as an inheritance could mean the difference between a comfortable retirement and a stretched one. It can be easy to spend cash on things you have always wanted such as a pool for the backyard or a home renovation, but there could be better ways to utilise the extra funds. Some may decide to tuck the money away into a term deposit, but there are other options available. The below are possible options that are worth considering.
Shares
Purchasing shares will generally make you a part owner of a company. Before taking the leap, consider your investment strategy by speaking to a professional financial advisor1.
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Bonds
A Bond is a financial instrument that is provided to an investor in exchange for capital (cash) by a government or corporation if they need to raise money. Investors who purchase bonds are lending money to the bond issuer for a fixed period. During this period, interest payments are made to the investor. At a stated future date, the principal amount borrowed will be returned to the investor2. If you’re looking for a safer investment, some investors tend to steer towards government bonds as they are generally less volatile. Below are some of the benefits and risks that may be involved3.
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1 Australian Securities and Investments Commission (ASIC), 'MoneySmart: Shares', Accessed: 6 October 2017
2 ASX.com.au, 'Products: Bonds', Accessed: 6 October 2017
3Australian Securities and Investments Commission (ASIC), 'MoneySmart: Australian Government Bonds', Accessed: 6 October 2017
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