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Thread: Depositing money at banks or doing investment in the stock market?

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[quote=APAULT,243815]With an interest rate of 3.6% and an inflation rate over 3% the real rate of interest is little more than zero.

Of course there is risk in investing in shares ('stocks' in US English).  I have invested in companies that were considered by many people to be sound and they have collapsed.  Others have simply dropped in value for a long period.  On the other hand I have made money where shares have increased in value and from the dividend payments.  Overall I am ahead, but I am not rich.

The average investor should simply try to get a good return not get rich, though with what has happened on the Chinese market in the last two years it is a bit hard to see the wisdom in my comment.  The Chinese economy is booming and as long as it continues to grow well, people can make money from share investments.

But the non specialist investor is probably best advised to invest in managed funds/unit trusts (same thing) from reputable investment companies, often part of banks or insurance companies.  They will pool the money of many investors and but shares in many different companies.  Then the good and the bad are averaged out.  90% of my money is invested in this way because I believe I cannot do as well as the professionals, but I invest 10% of my money myself, for fun, and just in case I am actually better at it than I thought (and it seems I am not!) so in effect I am gambling with this 10%.

My advice is shares are better than bak deposits, but invest through managed funds....and don't panic whewn ther is a downturn in the market.  Maybe you won't get rich quick, but you are not likely to lose your savings in one go either.

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