Investment

Management of financial instruments

 

Investing is one of the ways you can create a solid financial base for yourself in the future. It's a long-term process, the main objective of which is to put some of your income "to work" in assets that generate a return and so speed up the accumulation of capital.

Judging by the history of the financial markets, depending on the type of investment asset, over the long term you can expect to earn a return of up to 10 per cent on invested capital.

Historical data for investments in different asset categories from 1928 to 2017 show that over the long run investments provide a return that exceeds the rate of inflation. Moreover, the higher the risk level of the investments was, the bigger was the return on the investments.

Investment categories Annual average, per cent
U.S. stocks* 9.7%
Long-term U.S. Treasury bonds* 4.9%
Gold** 4.7%
U.S. residential housing prices*** 4.0%
Short-term U.S. Treasury bills* 3.4%
U.S. inflation**** 3.0%

Sources: * www.stern.nyu.edu; ** minerals.usgs.gov; *** according to www.econ.yale.edu, **** according to www.measuringworth.com.

Periodic investment

Periodic investing sharply reduces the risk of fluctuations, is attractive for those who don't actively follow the financial markets and doesn't require big starting capital, yet helps to accummulate a significant amount of assets.

The graph below illustrates, based on historic data for returns on U.S. stocks, how accumulated capital would have changed if 100 U.S. dollars had been invested every month.

Where do we invest?

The investment management team that works in "Invalda INVL" group companies includes more than 10 professionals whose experience helps to select the most appropriate investments in every country and to reduce potential risks.

They focus on investment types and regions that they know well, which is why they invest in company shares and bonds in global emerging market - from Estonia in the north to Argentina in the south. All these countries are different, but their development is similar.

How are we doing?

Data for the middle of 2018 shows that the biggest part of investors - 5,628 clients had chosen investment funds managed by INVL Asset Management, which was 84.3 percent of those, who invested in mutual funds registered in Lithuania.

Source: Review of Lithuania's 2nd and 3rd pillar pension funds and of the market of collective investment undertakings, middle of 2018, Bank of Lithuania.