Want to make a killing? The financial markets could be just the place for you. In the first of two articles, Shatadru Roy Choudhury looks at the different investment opportunities on offer.



It's not just experts, thrill-seekers and gamblers that put their savings into the world's money markets these days. Over the last three decades, an increasing number of ordinary citizens, with no background in investing, have also been turning to the financial industry in an effort to boost their income. For those readers who are also thinking about taking the plunge, here is a brief guide to the different markets you can invest in.

The Exchange Rate Market
Chances are you've already ventured into this market out of necessity when you left your home country for Japan. The exchange rate is simply the price of one currency relative to another one, and is heavily influenced by how a country's economy is performing. A popular strategy among investors in this market is to buy a currency that is undervalued and to invest this money in the country's stock or bond markets. Once the value of their financial investments and the value of the currency have risen significantly, the investor can sell them off at a considerable profit.

The Bond Market
If businesses (or governments) need to borrow large sums of money, this is the market they turn to. Bonds are "I owe you" certificates issued by companies to you, the lender. They prove that you have lent them money and that they will pay you interest for the loan at regular intervals over a specified period of time. The initial sum you invested gets fully repaid once the bond has reached its expiry date.

The Stock (Or Equity) Market
Chances are you already know a fair bit about this market due to the strong media exposure it receives. A stock gives you an ownership claim on a company and usually entitles you to receive dividends from the company's profits at specified times of the year. The value of your stock fluctuates in accordance to the performance of the companies you have invested in. You usually reserve the right to sell your stock at any time you choose.

Mutual Funds
These companies have become so popular in recent years that they are slowly beginning to replace banks as the leading investors in the world's money markets. A mutual fund pools together the money of many individual investors, and goes on to invest it for them in stocks, bonds and other assets. A chief advantage of these companies is that it saves you considerable time as you don't need to make the investment decisions yourself. Mutual fund managers also tend to be experts in financial investing.

Deciding Where to Invest
If this is the first time you have ventured into the financial industry, a good move would be to pinpoint the investment options that best suit your needs. By scouring the financial section of newspapers, reading investment magazines and surfing the Internet for advice you should be able to acquire a basic understanding of finance. The next step, which will be discussed in the next issue, is to develop a sound investment strategy.