Before Investing - Ask Questions

There are 3 critical questions to ask and discuss with your advisers when contemplating the worth of the return from a particular type of investment.

These three questions are:

  • How stable is the return?
  • How variable is the return?
  • How volatile is it?

The returns from investment can be classed under these three headings and the correct answers to these questions is part of the information required when selecting an investment product.

  1. Stable Returns.
    A stable return is a return from an investment that has a variable or fixed rate of interest payable to the investor, whether the company makes a profit or not. They are attractive because of the stability and while the income return may be low compared to others, the risk factor is very low.

    They normally have a priority in payment over other creditors should the company run into financial problems and it is only where the business is liquidated or closed that this investment is at risk. An example of investments with returns considered stable include:

    • Government bonds. 
    • Local autho...

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