Considering Investment Options to Grow Your Money Wisely

Everyone dreams of building wealth, but for many people daily life makes this goal less attainable. That is not to say; however, that it is an impossible feat for Bangladeshis. It requires small investments of your earnings into products that can create income later in life and generate wealth over the long term. While most Bangladeshis tend to focus on putting their earnings in bank accounts, lower interest rates on deposits are making other types of investment schemes look attractive. Investing intelligently can help you to generate income and build wealth to secure your financial future. Therefore, it is critical to pick the right investment plan based on your current life stage, long-term needs, and risk appetite. Compared to a pure savings plan, an investment product can stretch your money further and beat inflation over time.

What is an Investment Plan?

Before going into detail about the various types of investment plans, let’s first establish how investments differ from savings plans. Each type of plan represents different approaches to building wealth that accomplish distinct goals within an overall financial strategy. For the risk-averse, savings plans enable people to safely accumulate money over time. Typically it is money set aside for an emergency or future purchase.

In Bangladesh, savings certificates like the five-year Bangladesh Sanchayapatra or three-monthly profit-bearing Sanchayapatra offers interest payments periodically until the plan matures, according to the Department of National Savings. However, there is a limit to the amount that individuals can invest. Mutual funds are collective investments in which pools of money are invested in the stocks and bonds of various public companies and managed by a fund manager. Additionally, the Mudaraba Special Savings (Pension) Scheme, which is based on Shariah Principles, encourages middle and lower-middle class professionals and service holders to save for old age based on their ability. Account holders under this scheme receive a minimum of 65% of the income derived from the Mudaraba Fund during any accounting year, according to their contribution to the total investment.

Alternatively, investments are financial instruments that enable you to create wealth for future needs. The most common of these are traditional stocks and bonds. In Bangladesh, this type of investment can be a good option since the returns mature at a specific rate and typically outpace inflation rates. There are also various investment plans that allow you to regularly invest in different money-market products. These investment plans provide the much-desirable advantage of creating wealth through disciplined payments over time.

Investors in Bangladesh can also consider purchasing insurance as an investment. In addition to protecting you and your family from risks, policies like MetLife’s [https://www.metlife.com.bd/solutions/savings-investments/] can transfer the cash value of your policy and dividend into an Investment & Protection Account (IPA). This allows policyholders who are approaching partial or full maturity of their existing policy to use the net maturity values to enhance their current protection or transfer it to a tailor-made policy. If you want the peace of mind of securing your family’s financial future, a life insurance plan that generates good financial return can be a great option.

How to determine which types of investments are best

While there is no one-size-fits-all approach to meeting your financial goals, it is important to balance your risk tolerance with your expectations for returns and liquidity needs throughout life. For this reason, it is advisable to identify various types of investment and savings plans.

Once you have established your motive for investing, choosing the product becomes rather easy. Consider the following when planning your investments:

Choose investments carefully after conducting research

  • Don’t fall for “quick-buck” schemes that promise high returns in a short time
  • Review your stock and mutual fund investments periodically
  • Consider the tax implications of the returns you earn on investments
  • Keep things simple and avoid complicated investments that you do not understand
  • How much you are earning and how many financial dependents you have

A young investor will have vastly different investment goals than an older individual. Therefore, investments should be chosen carefully, with the guidance of a financial advisor to get the most out of it.