Savings and Investment

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Page last modified on May 5, 2009
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Why Save and Invest?

All of us go through hard times and it is important to save for “a rainy day”.

Every saving or investing product has its advantages and disadvantages. Differences include how fast you can get your money when you need it, how fast your money will grow, and how safe your money will be.

Some tips for saving are as follows:

Decide what you are saving for
Decide how you should save and invest
Learn about the company before you invest
Only invest money that you can afford to lose
Set financial goals and start saving or investing to reach those goals
To lessen the risks of investing diversify your investments
Save and Invest for the Long Term.

Saving / investing products

There are many different ways to save and invest. Following are some of the ways:

Savings Accounts

Deposit your money in a savings account at the Bank of Maldives or any other bank, and you can easily get your money whenever you want it. Although savings accounts are not normally insured in Maldives, Banks are regulated by the Monetary Authority.

Bonds

When you buy a bond, you're lending your money to the company so it can grow. The company promises to pay you interest and to return your money on a date in the future.

Shares

When you buy shares in a company-you become one of the owners. Your share of the company depends on how many shares of the company you own. You can get dividends from profits.

Share investments give no guarantees of profits and are known as one of the most risky investments. Depending on how the company does, the stock price can fall and investors may lose money. However, research shows the investment that has provided the highest average rate of return has been stocks

We can make money in two ways from shares

The price of the share can rise if the company does well and other investors want to buy the company's shares. If the price of a share rises from Rf100 to RF120, the Rf20 increase is called a capital gain.
The company sometimes pays out a part of its profits to shareholders as dividends. Sometimes a company will decide not to pay out dividends, choosing instead to keep its profits and use them to expand the business.