What kind of investment are you looking for?

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Recently one of a friend told me he wanted to trade the gold and silver. I further asked what kind of investment is he looking for? is it a physical gold and silver or paper gold and silver. After a long talk I finally found out that he just wanted to find some trading like FOREX or other kind of investment vehicle which is not tangible asset. 

After that, he continued explain what was his recent investment activity. he said he just invested in a company which will gives a dividend 10-15% every month. The company mainly invests in gold. So i was really curious how come only invest in gold can earn such a high dividends. Finally i discovered that this company actually is operating in a form of pyramid scheme ( in my opinion). Normally this kind of scheme will earn a lot of money when they have a lot of down line, so the top of the scheme will earn hell lot of money. However, the bottom most of them just receive a meager pay in the group. 

It is quite interesting that a person can earn more than 10% dividends in one month, which sounds too good to be true as well. But you cannot shut your mind off when there is a new thing appears in front of you. When you say no, nothing fresh will come into your mind. Simply means beware when something is too good to be true while you open your mind. There is nothing as a free lunch, if you want a higher return, you have to trade off with a high risk investment in order to get a high return. Here are the some of the investment vehicles which commonly see in the investment portfolio.

Savings Accounts 

- Insured savings accounts are the most liquid of all traditional investments, which means that they can be most easily converted to cash, which in turn can be used to buy goods and services. As opposed to cash on hand, savings accounts earn interest and are insured by the Federal Deposit Insurance Corporation (assuming, of course, that the bank is a member). For the purposes of this article, the term "savings account" also includes bank money market accounts and certificates of deposit.

Advantages of Savings Accounts as an investment:

Savings accounts are the safest interest-bearing investment available. Your principal is usually protected by the FDIC as well as federal and state banking regulations.
Due to the advent of electronic banking, money in savings accounts is readily accessible at any time of the day or night.
Disadvantages of Savings Accounts as an investment:

Because of the generally low rates of interest that savings accounts earn, there's the potential for loss of your money's purchasing power due to inflation.
The maximum FDIC insurance is $100,000 per depositor account. If the bank fails, it could take a while to receive your money while the FDIC audits and verifies balances.
A significant financial penalty is imposed for cashing in a certificate of deposit before its maturity date.

Debt Instruments

 - Debt instruments, which are bonds and notes, are obligations of a government, a business, or other entity. Notes have an original life (or maturity) of less than ten years, while bonds have a maturity time of greater than ten years. Their safety (or lack of it) is a function of the financial strength of the issuer. In the United States, for example, the safest debt instruments areU. S. government bonds and notes, followed by state and municipal, corporate, and individual bonds and notes. The riskier the bond, the higher the interest rate it must pay.


- Because of their liquidity, stocks are subject to daily and short-term price fluctuations. Such ebbs and flows may be due to international, national, industrial, economic, or corporate events and circumstances – for example, new product introductions, corporate restructurings, interest rates, wars, hurricanes, etc. These price swings may actually be outside the long-term potential price range for the stock. Stocks have historically returned about 9 percent compounded annually for the last hundred years.


 - These are objects that are difficult or impossible to duplicate and that have cultural, historical, or social value. Collectibles include, but are by no means limited to, artwork (including paintings and sculptures), antiques and relics, coins, stamps, rare books, dolls, automobiles, sports trading cards, and the like.

Precious Metals 

- Precious metals include gold, silver, and platinum, among others. Since ancient times, gold and other precious metals have been accepted as mediums of exchange worldwide. Today, many investors use precious metals, or their stocks, as a hedge against massive inflation. As the prices of the metals themselves rise, so do their stocks. Generally speaking, precious metal stocks have the same advantages and disadvantages as other stocks.

Advantages of Precious Metals as an investment:

Precious metals are an excellent hedge against inflation. Historically, gold, silver, and platinum have been accepted as standards of value. During periods of hyperinflation, their prices rise accordingly to keep pace.
Precious metal stocks, like other stocks, can be easily bought and sold on major stock exchanges, giving them a high measure of liquidity.
Owning shares in a precious metal company is an easy way to invest in precious metals without having to physically buy and hold the actual commodities.
Disadvantages of Precious Metals as an investment:

Like collectibles, precious metals do not earn interest.
Precious metal prices are greatly influenced by the actions of governments. For example, if Russia (the world's major producer of platinum) were to decide to sell off its stockpiles of the metal in order to raise capital, the price of platinum worldwide would drop.

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