Keeping one's savings in fixed term deposit may probably be the safest on an investment risk-return continuum, but it, nevertheless, carries with it the risk of negative return when the rate of inflation is higher than the rate of interest received from the fixed deposit, leading to a loss in purchasing power per dollar principal to the saver: otherwise know as the inflation or purhasing power risk. Direct investments in the share market will subject the investor to the specific risk of falling share prices without reprieve offered by the benefit of portfolio diversification or fund management expertise available under collective unit trust investment schemes. 
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Friday, October 8, 2010
Fixed Deposit
Keeping one's savings in fixed term deposit may probably be the safest on an investment risk-return continuum, but it, nevertheless, carries with it the risk of negative return when the rate of inflation is higher than the rate of interest received from the fixed deposit, leading to a loss in purchasing power per dollar principal to the saver: otherwise know as the inflation or purhasing power risk. Direct investments in the share market will subject the investor to the specific risk of falling share prices without reprieve offered by the benefit of portfolio diversification or fund management expertise available under collective unit trust investment schemes. 
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