How to get the most profit out of 50.000 Euro

“You have some savings and you would like “to round them up”. You don’t know what to choose between a bank deposit, buying shares or a real estate property.

All of the ones who managed to make business over the past years are saying that the recession periods are the best ones for investments. This is explained only if you know how much and on what to bet. In the current economical context, how could you optimum capitalize a fixed capital of, let’s say, 50.000 euros?

No matter which solution you choose to “multiply” your money the first step should always be the same. Ilias Papageorgiadis, CEO of MORE Real Estate Services sustains that, out of the available amount for investments, a minimum of 20 – 30% should be kept in a bank deposit. For a 50.000 euros budget this would mean to put aside from the very beginning 10.000 euros. The bank deposit is one of the safest options, protecting the capital from the inflation. The main draw-back of this kind of investment is that it does not assure a significant increase of the subscribed amount.

The bank deposits are the solution that imply the lowest risk

For the investor with a law appetite for risk the option of placing all of the money in a bank deposit remains a quite viable one. “The main advantage the bank deposit offer is that they are exempted from the income tax throughout all 2010 and they have State guarantees up to the exact amount of 50.000 euros”, underlines Razvan Popescu, financial consultant for OVB. Thus, obtained yield cannot be ignored at all. For a 4.07 Ron per euro currency rate results an equivalent of 203.500 RON for 50.000 euros. “For a term deposit for 3 months we can still find interests of 8.75 – 9%. This would provide us an income of 4.612 RON per 3 months”, underlines Popescu. To protect themselves from the possibility of a drop in the interest rates for the banking deposits it is recommended for the depositor to opt for the version of prolonging it with capitalization, which obliges the bank to pay a fix interest even if the BNR monetary policy will continue to drop. If this last one will grow, the client can go to the bank to renegotiate the contract so as to bring the interest up to date”.

The Leu, double yield compared to Euro

As far as the currency that offers the best interest rate for a bank deposit, the Leu is by far the best option. For a 3 months deposit in Euro with an interest of 3.50%-3.55% the obtained interest is considerably inferior to a deposit in Lei, respectively 443 euros, points out Popescu. For a 6 months deposit, the comparative interest for lei to euros deposits would be 8.047 and, respectively, 937 euros, while for 12 months the interests will go up to 17.806 RON and, respectively, 2.000 euros. Papageorgiadis does not recommend creating deposits for a longer period than 3 months for the moment so as the depositor to enjoy “the summer” offers which the banks could launch over the following period. *

The growing Stock Exchange: until when?

For the investors who taste a higher risk the stock exchange could be a quite attractive option. Papageorgiadis sustains that the value of some shares doubled or even tripled compared to the lowest level touched over the last year. Plus, a series of annalists see further increase in their trend. Still, nothing is for sure. Plenty of the voices in the market are also expecting a new stock decline after the rapid growth recorded this year. The More Real Estate Representative warns that, if we will pass to a new phase of the crisis, the stock exchange will be the first one who will get “crushed”, as it happened over the recent past.

Different types of shares

The ones who decide to invest in stock exchange should at least have a minimum knowledge in the field to avoid assuming unnecessary risks. Papageorgiadis recommends going for strong shares, such as SIF. For the short-term investors an increase of 20%-30% and a depreciation of 10%-15% would be the ranges that would allow acquiring a share package. Placing the whole amount in one type of shares should be avoided as well.

To remove any doubt of an inefficient investment the money can also be placed in Investment Funds that bet on shares, says Popescu. These owe a portfolio that brings good yields, some of them going over 20% since the beginning of the year and until now. Another solution is to go for a unit-linked, option that combines the safety of bank deposits with the possibilities of income of the stock exchange investments.

Real Estate, at their ground 0 for investments

For the ones who want to beneficiate both from safety and as well from the possibility of a significant increase of the value of investments, real estate properties continue to be a solution. Ilias Papageorgiadis says that the property prices dropped, in average, with 40% up to 70% compared to the peak from the beginning of 2008. He mentions that the real prices of the transactions, that are 15 to 30% smaller that the initial asked ones by the owners, have reached, by large, a minimum level, no relevant decreases being expected for the following period. When the investor is sure that he has reached this minimum price in a negotiation, he can close the transaction.

Using the 40.000 euros out of the initial budget of 50.000 (after placing 10.000 in a bank deposit), the buyer can acquire a studio in either new residential project or in an old building, but still constructed after 1985. Such a property would generate by lending an annual yield of 7-8% out of the initial value of the investment. In addition, on a long term, the owner can count on a 5-6% increase of the value of the property, if this one is of good quality.

If investing in a land, it is necessary for this one to be located in an area benefiting from (or in the proximity of) utilities, which presents clear signs of future development. There should also be taken into consideration the properties 70-80% cheaper than the peak period in the beginning of 2008. Papageorgiadis warns though the potential investors not to expect spectacular profits in less than 1.5-3 years from now on – the necessary period for the market to recover and re-enter a clearly growing pace”.

This article was published at www.imobilare.ro

http://www.imobiliare.ro/info/stiri-imobiliare/cum-sa-scoti-cat-mai-mult-profit-din-50000-de-euro/

Author: Adriana Dragusin

On Thursday, 29^th of April:

How to get the most profit out of 100.000 Euro