For a better TOMORROW

The first month's salary that a graduate earns seems to be all the money in the world. But a few months down the road, the young professional begins wondering where all the money goes. For a better income, consider investing some money.

Now don't shun away with the excuse that with your small income putting aside an amount would be impossible.
Even if you earned more, it is likely that you would have continued to spend all the money. It's more about self-control and the attitude with which you manage. One of the many ways to be in control is using mobile applications which focus on keeping track of your money. From setting budgets to noting down incomes and expenditures, there are several apps that make you more cautious and insightful about money management, consequently enabling you to set aside a sum at the end of every month.
So then, you can start thinking about investments. There are some basics you should first learn.

Risk versus return
Generally speaking, the reality is that the potential return of an investment is higher when the risk is also higher. A low-risk investment is likely to yield a low return; a project that is relatively riskier has the potential (but not necessarily that it will!) to bring a greater return.
But the risk undertaken ought to be calculated in advance, along with contingency plans -- a cautious move an investment must be.

Liquid your preferred state?
An asset that you can convert easily to cash is said to be high in liquidity. Cash itself is the most liquid of all assets. A piece of land is usually very illiquid, since selling it and getting the money may prove to be time consuming and inconvenient.
An investment can require tying up money for some time. But make sure you have enough funds when you need them: don't suffer from a liquidity crisis.

Spreading the way
Again, generally speaking, it is wiser to have a portfolio than to be stuck with just one investment. Diversification spreads the risk. For example, if you lose money on one company's stock, you may gain in another, helping you to balance out.
An alternative strategy is taking bolder positions on fewer investments. But the safer and conventional way to go is to have a diversified portfolio.  
So, here are a few investment options you can choose from.

Save up
A convenient way of making some money is by opening a savings account or a fixed deposit account in a bank.
In comparison to many other investment ideas, the risk here is very low, and so are the returns! Nevertheless, saving in a bank is preferred by many because of the sheer simplicity of the matter.
The concept is quite plain: you keep a certain amount in the bank for a certain period, and the bank pays you a certain percentage of interest. You may have to maintain a minimum balance and provide a sum on a monthly basis. Many of these services also allow you to draw out money whenever you require, with the amount of interest being based on the time period. Cash in banks, in these cases, are very liquid assets.
The percentage of interest varies on the amount, and also on the banks' offers. There is a wide plethora of services: it is best that you preliminarily browse the websites of a handful of banks and then call up a few of them and avail the service that suits you.    

Bond with the best
Investing in government bonds and saving certificates is another trouble-free way of earning some extra money. It is a very low-risk venture. And has seen a phenomenal rise this year. A report published in Star Business of The Daily Star on 8 July, 2014 said, "Net sales of savings instruments rose almost 14 times in the first eleven months of the just-concluded fiscal year, as investors were lured in by government interest rates as high as 5 percentage points larger than those offered by commercial banks on term deposits."
An example of a savings certificate is the 'three monthly profit bearing sanchayapatra'. It has a duration of three years and denominations of Tk.100000, Tk.200000 and Tk.500000 and a rate of profit of 12.59% (on maturity). From different savings certificates to prize bonds, there are many options to choose from. For more information, visit the website of Directorate of National Savings, http://www.nationalsavings.gov.bd/index.htm.

Get a hobby
Having collectables like stamps or practicing an art such as bonsai or being an art lover can bring good money in the long term -- if you see it as an investment. Not only are you making money, you are also cultivating a hobby.
And it is not true that you have to spend hefty amounts for becoming a collector. But you require expert knowledge that comes with a lot of studying and experience. You will go through this 'hassle' only when you are actually passionate about the hobby.
Pay heed to Benjamin Franklin, an American statesman, who is regarded as one of the founding fathers of the USA. “An investment in knowledge pays the best interest,” he said.

Bulls and bears
The stock market crash of 2011 left a scar in many people. Investor confidence received a serious blow. But the market is slowly recovering. If you know the stock market dynamics well, go ahead and invest.
Test the waters first. For a period of time, make an imaginary portfolio on Microsoft Excel. Observe the market and buy and sell in your make-believe venture. If you can make profits in the 'simulation game', go for the investment.
It is important that you become a proper investor. Buying a stock with the intention of selling it after three days is always not a good strategy. “Investing should be like watching paint dry or watching grass grow. If you want excitement... go to Las Vegas,” Paul Samuelson, a celebrated economist, once said.
Do not be a gambler. Prepare to hold stocks for longer periods, and make sure that you do your research --about the company performance, history of dividends and other relevant statistics.
Compared to savings, stock market investment is subject to more risk/uncertainty and it has the potential to bring better returns. You can minimise/spread the risk if you have a diversified portfolio. Stocks are relatively liquid: you can sell them off easily. But then again, if you are currently at a loss, you may not be willing to do that.

A silent partner or an angel?
A business angel or an angel investor provides capital for a business start-up, in exchange of an ownership stake. One of the common reasons an infant business may seek an angel investor is that, conventional banks may have refused credit.
Be extremely cautious in choosing who you can invest on. There are concerns about trust. Also, from your side it requires sound business sense (preferably in the industry in which the business will operate).
The risk can run very high; aim for high returns. Be aware of your liquidity position too.
You might have friends who are interested in opening a small business of their own. See if you can join in, at least by providing a sum and becoming a silent partner; you will not be directly involved in running the business, as compared to the general partner(s). Here too, there are concerns of trustworthiness and your confidence in the project.

Hopes and dreams
There are numerous other options for investment. From buying land to starting your own small, part-time business, the choices seem ample.  It all depends on your area of expertise and how much money you are willing to put in.
Do not be an irrational optimist, but cultivating a positive attitude towards the idea of investment is perhaps the most important thing.
After all, the very principle of investment is that you are putting money in something in the hope of profitable returns in the future. As the great investor Benjamin Graham once said, “To be an investor you must be a believer in a better tomorrow.”
So, how does tomorrow look?