Where should we invest our money?
September 21, 2019
In an earlier article, we looked for the most optimal solutions to use the $ 5 billion lottery prize , and this time we looked into what it would be worth investing in a much smaller amount of $ 5-10 million. Let’s see what can be done with our saved money!
Real estate can still be a great investment
Real estate is clearly the best investment of the past year. The prices rose in the sky, especially in the case of Budapest real estate, and the inner districts and the XI, XIII. and XIV. the most popular. Those who bought property in the previous year may now have up to 30-40% more housing, but of course this depends on the area and the condition of the property. And some of the cheaper, out-of-district panel flats can be sold for up to 50% more than they were available a year ago.
The market is still on the rise, with lots of people looking for homes, so even now it’s not too late to invest the millions we’ve saved. Of course, we need to think carefully, look at the real estate market to catch a relatively cheaper apartment, which we may sell at a higher price after a renovation, with a few million benefits in total. Of course, we also need to tax on real estate, and we should not forget this when calculating the expected profit.
We can slowly forget about deposits
It is certainly worth looking at other investment options, but we will see that with a guaranteed investment we can only expect very low returns. Banks pay only interest on bank deposits slightly above the current central bank base rate of 1.35%, so this form of investment can slowly be forgotten, at least until the central bank base rate increases significantly. Larger banks usually have a 1.5-2% interest rate on their deposit, and we are happy to find a deposit option that promises slightly higher returns.
Even though interest rates are low, they still have to be taxed, with interest rates at 16% and EHO at 6%. These taxes can be reduced or completely reset if we save our savings on a Long Term Investment Account. The National Deposit Insurance Fund has approx. Providing up to $ 30 million (up to $ 100,000) in bank deposits for our clients, we guarantee at least a very low interest rate that our money is completely safe.
Other investment opportunities
Currently available government securities have an interest rate of 2.5-3% depending on their type (Hungarian Government Bond, Interest-bearing Treasury Note or Treasury Savings Note) and maturity. We also have to tax 16% of our yield on government securities. With this investment, the Hungarian state guarantees the payment of capital and interest at maturity, so that we can be fully safe in these “papers” as well.
However, anyone who does not insist on a guaranteed interest or return, or even the risk of losing part of their invested capital, can turn their money into mutual funds. Even lower-risk funds can achieve 3-5% gross return, while a more risky portfolio can yield returns of up to 15%.
Of course, instead of choosing a riskier investment fund, we can even invest our money in equities. And true entrepreneurs can try foreign exchange or futures trading. But successful trading requires knowledge of global economic processes, without which it would be irresponsible to risk millions.