The persons who want to turn their savings into smart and profitable investments must make decisions based on proper acknowledgment of both personal financial goals, and the market and investment instruments. The planning of investments and also the choice of the right instrument require a rigorous analysis of the available options from several angles. The National Bank of Moldova, in partnership with the Independent Think Tank “Expert-Grup”, emphasized the main aspects that must be taken into account for a person to make a reasonable investment, IPN reports.
“Setting the objectives of the investment is another aspect of financial planning, such as the intention to secure and consolidate financial resources in order to use them later in case of major events – buying a home, studies for children or creating reserves for the retirement period, etc. The period for which the person is willing not to use or consume the available money and to make the investment is calculated based on the set goals,” said the NBM.
Understand the investment instruments is essential, as each instrument involves different levels of risk, returns, deadlines. Investment offers must include information about the issuer and its financial situation, the reasons for the offer and the purpose of the accumulated funds, the offered guarantees, the conditions of the offer and a brief description of the risks associated with the investment.
Regardless of the investment instrument chosen, it is wrong for the person to expect overnight enrichment. As a rule, the higher is the earning potential, the higher is the investment risk. “As an investor, you must be aware that financial instruments do not only mean obtaining a gain (in the form of dividends, interest or from the sale of the instrument), but also involve particular risks of not obtaining the expected gain or even sustaining losses,” noted the NBM.
It is important for the person to monitor and know the economic developments, monetary policy trends, growth prospects of particular economic sectors. “If you invest in financial instruments using intermediaries with activity regulated by the NCFM, you automatically benefit from protection from the Investor Compensation Fund. If the investment firms turn out to be incapable of returning the clients’ funds and/or financial instruments received for the provision of investment services, the Fund, in accordance with the Capital Market Law, shall pay to each injured client a compensatory payment that does not exceed the equivalent in lei of €1 000, calculated at the official exchange rate of the NBM on the date of payment,” the central bank also said.
