Editor’s note: This article was first published in August 2010, and every rate in it is from that month, including deposits paying 4-5% at 12 months, a savings-bank fund paying up to 12.60% over 4 years and 10-year Spanish government debt at 5.96%. Most Spanish savings banks have since disappeared or been merged into banks.
This article has been updated in The most profitable investments of 2011.
In times of crisis, hard as it may be to believe, more people become interested in investing. They know that, despite the risks involved, it’s one of the ways to earn a high return on savings that just sit in the bank earning nothing. Let’s look at the standout investment options for 2010–2011.
We’ve already covered practically every financial product, but we’ll highlight some changes taking place in the way people invest. Now more than ever, banks offer a wide range of high-yield, capital-guaranteed financial products, both in fixed-term deposits and in their investment funds.
When it comes to investing, the financial vehicle with the least risk is the fixed-term bank deposit. It’s a matter of comparing several banks to see what they can offer, since there are deposits paying up to 4–5% over 12 months for amounts of €1,500–3,000. That’s undoubtedly a good return, with your capital guaranteed at the end of the term.
We’re preparing a summary of the banks offering the best terms on fixed-term deposits. In the meantime, if you’re not familiar with this type of investment, you’ll find a detailed explanation in our article:
Investment funds are another investment that is changing: some banks are already offering a guaranteed return of at least 8%, even if the fund itself doesn’t make a profit. In this case, it’s absolutely essential to read the small print of the contract to avoid unpleasant surprises. One Spanish savings bank stands out, currently offering a return of up to 12.60% on an investment fund with a minimum term of 4 years, undoubtedly a good investment.
Government bonds are another good option. Not long ago, investors were terrified of investing in Spanish public debt, but now the big investment firms are even recommending it. Investing in debt is a way to earn income yielding up to 5.96% in the case of 10-year Spanish government bonds.
And let’s not forget another type of investment that is much more profitable, although it carries risk: so-called high-yield bonds. Remember what we’ve said on several occasions:
More return means more risk, but knowledge reduces risk.
To learn more about high-yield bonds:
Because banks aren’t lending, companies are turning to private financing, offering stakes in their business that yield between 8% and 17%. When it comes to investing in a company or business, I think that rather than analysing the type of investment, you should analyse the company. For some tips on what a professional investor looks at before investing, read the article below, where a great investor, Arthur Rock, advises us on what to analyse before putting money into a business or company:
Now, whatever people say about investing in the stock market, I think the best investment you can make is in acquiring stock market knowledge, because once you’ve accepted the risks involved, the stock market is without a doubt the most profitable investment. We explain why here:
I think that gives you a good overview of today’s most profitable investments. For those who have never invested, we’re starting to publish articles on getting started in investing. We won’t teach you how to invest, since that’s hard to do through a website, but we will give you some tips to help you prepare before you invest. I hope you find them useful:
- First steps to get started in investing
- 7 levels of investing and 7 types of investors
- How to make your first investment
Featured image: Matthew Black, CC BY-SA 2.0, via Flickr.
