What is Independent Investment Advice?

While many highly qualified individuals can give you some good independent investment advice, each investor has different expectations and risk tolerance that should be considered before dispensing specific investment counselling. A few basic aspects need to be clear in your mind to help you achieve the best results from your investments. These include investing amount, investment objective, risk appetite and investment horizon.

All investments involve a balancing act between the return from your investments and the risk you are willing to undertake. You may want to diversify your portfolio with a mixture of medium to high-risk investments with low risk investments to achieve an appropriate risk-reward balance to suit your risk tolerance. A few major types of low to moderate risk investment options and the risks associated with these are highlighted below:

Savings Accounts

Cash Investment is the most common form of investments. They include products such as interest bearing bank accounts and high yielding savings accounts. This is one of the safest forms of investment where your capital is protected and available at all times. However, given the low risks associated with this investment, returns are fairly nominal. You may want to keep a portion your short-term core savings in interest bearing savings accounts.

Term Deposits or Certificate of Deposits (CDs)

Term deposits are an investment where you lock in your capital for a certain term ranging from 3 months to 5 years with a guaranteed interest rate. Your income remains secured, but given the fixed term requirement, your asset may be somewhat illiquid during the term. A portion of your portfolio that you can afford to lock in for a predefined period should be placed into CDs for a better return than simple savings accounts. CD return rates can vary between 1 to 4 percent returns, depending on the amount of time the money is in the account and the balance itself.

Mutual Funds

Mutual funds are collective investments where many investors are allowed to invest in a diversified portfolio of stocks, bonds and other vehicles, where money is traded on regular basis. They are basically money market instruments.  They fluctuate on the basis fluctuations if the market value of the individual components of the mutual fund. Mutual funds have various categories with varying risk-reward combinations to suit any need. Your capital is no longer protected from market fluctuations. You may choose to invest in mutual funds as opposed to stocks to have a more diversified, and hence slightly less risky investment than stocks.


Bonds have been very successful in the past few years. In bonds, you loan your money for a set amount of time at a predetermined interest rate, which can both be fixed or variable, and receive regular interest payments. The price of the bonds increases when interest rates fall, and decreases when interest rates rise. At the end of the term, you receive a payment equal to the bond’s face value. Bonds can have a varying risk factor and corresponding returns depending on the credit worthiness of the issuing party. Bonds can result in loss of capital as well if not held to maturity, or in case of default of the issuing party. If you are looking for a fixed income investment vehicle, then consider bonds as part of your portfolio and also safeguard you in the event of prime interest rate falling.

Shares / Stocks

Shares or stocks represent ownership in a company. When you buy a share, you become a part owner in the company and become entitled to share in its future value and profits. If the company is in profit then the value of the shares increases and vice versa. These investments also come with potentially higher returns but with higher risk. Ordinary shares also come with voting rights that may allow you to vote on decisions regarding the corporation’s future strategy. Liquidity of stock based investments may vary based on volumes of the share traded on the relevant stock exchange. Invest in stocks if you want ownership and potential voting rights in the company you invest in.

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