The chart below (Sikasεm investment guide) can be used as an investment guide to select the right mix of investment products for your various financial needs. The first column lists some of the basic factors to be considered prior to taking an investment decision. The various investment options are also categorised under short-term, medium-term and long-term investment products.
The type of investment product (whether short-term, medium-term or long-term) depends on factors such as the common ones listed. For instance, an investor who plans to invest for a family vacation would be better-off in short-term investments such as Treasury bills. On the other hand, a young employee who wishes to invest for retirement can put most of his money in long-term products such as equity mutual funds.
Some investment decisions may demand an overlap of investment options from two different categories, especially when investing for a medium-term goal. The focus has to do with the investment category you are investing most of your money, rather than the category you are investing all your money. For example, an investor whose risk tolerance level is classified under ‘low to medium’ (refer to the chart) may be expected to invest most of his money in medium-term products and less amount in long-term options. That is, more of money market funds, more of bonds and less of balanced or equity funds. This similarly applies to an investor who has little experience in investment.