The different assets to invest your capital

Résumé du document

Crisis, sovereign debt, market price, speculators, all those words have becoming common words for many people. We heard about economic data every day those last years. The economy and particularly the finance are seeing as the centre of the world now. Every government tries to give a good image of their country to avoid high interest rate. Finance is now one of the most important key in the world and that's why I choose this topic. Along this paper we will try to better understand the different instruments that affect our economy.

We will start by explaining what are stocks markets and why they are seen as important in our world. After, we will see the different instruments by starting with low risk assets and finishing by high risk assets. We will end this paper by giving a brief personal opinion on the topic. When a company is on a market, it has the obligation to give relevant information to everyone at the same time. Usually, no one can have information from the company before this information is made public.

Companies are also obliged to give information each quarter, about its accounting, its governance… Those rules are verified by governmental organisation in all countries where there is a stock exchange market. In Belgium this organisation is the FSMA (financial services and market authority). It has for mission to provide oversight of financial markets and listed companies.

Extraits

[...] To avoid uncertainty about this amount Company A go to the bank and demand a forward contract dollar/Euro. The bank will propose a rate like The company A can now be sure of the rate that it will have in six month. If the there is an depreciation of the Dollar and that in six month the exchange rate is 0.70 the company have made a good deal. If there is an appreciation of the dollar the company have made a bad deal. [...]

[...] When brokers are taking a company as a target we can see huge variation in a short lapse of time. We can say that this method of trading have change the famous law that says that buying and selling make the market price. Indeed, without that mechanism you can only bet on the raise of a share and not on its decrease. Personal opinion: After having detail all the different asset that are available on the market, we can ask ourselves if the presence of those instrument is a good think for our world. [...]

[...] Corporate bonds: Just some words about corporate bonds because they are quite similar to governments bonds. The only difference is that you loan money to a company and not to a government. This difference results in higher interest rate for corporate bonds due to a higher risk. In fact companies have a higher risk than a state. Low risk assets: Real Estate: Real estate market has two different returns. The first one is generating income by renting flats or houses. The second one, is buying and selling flats and houses to make more value. [...]

[...] So, in Belgium investing in real estate market was and maybe is always a good deal because of this continuous growth but we are never safe from the explosion of a real estate bubble. So, what we can conclude of the real estate market is that normally you keep you money over the time (first graph).This investment prevent you from inflation but doesn't give you always a good return. This return really depends on the conjuncture and on the country. Arts and wines: Art investment can help you to diversify your portfolio. But investing alone in art pieces is quite difficult and not possible for many people. [...]

[...] The bigger a stock exchange is, the cheaper it will be to sell and buy stocks. Investor's protection: When a company is on a market, it has the obligation to give relevant information to everyone at the same time. Usually, no one can have information from the company before this information is made public. Companies are also obliged to give information each quarter, about its accounting, its governance Those rules are verified by governmental organisation in all countries where there is a stock exchange market. [...]