Where will I find profitability? This question worries investors, now that they are confronted with bottom interest rates and the end of the State Note’s golden era.
Analysts agree that profitability on most assets will remain low the next decade.
The difference in profitability between the different kinds of assets is being closely watched by the financial world. However we should not pay too much heed to this. This difference evolves strongly over the years after all and has no real predictive value.
Currently the difference shows shares are the most favourable, according to analysts however this is only due to the fact that shares are expected to have a higher profitability in function of their risk profile. Like one can only make an insurance contract for future risks, one must try to assess what the profits of the bonds will be upon determining one’s investment. How? By checking what their profits are now and by taking the prospects of the inflation and the historic records concerning risk premiums of shares into account.
Bonds make profit in the form of a coupon that is fixed when it gets issued. De shares investor on the other hand may hope to receive a higher dividend. But the increase in dividends between 1900 and 2010 was not as high as people believe when viewed in real terms. In 10 out of 19 investigated countries it was negative even. During that period, dividends in the world index had an annual increase of 0.83 percent, barely more than the inflation.
Then there is diamond… Whoever buys a diamond often does so to make someone else happy. After all, a diamond is and will remain ‘a girl’s best friend’. However more and more investors find their way to investment diamonds, because it retains its value and even increases in value year after year. In private banking circles for example, quite a lot of clients request to have part of their capital invested in diamonds.
BAUNAT DIAMONDS can advise you on this matter with great expertise. When we say investment diamonds, we are talking about diamonds that are sufficient in quality when looking at the 4 C’s: carat (meaning weight), clarity, colour and cut. If you have a stone with a high rating in all four of these criteria, your investment is all set for the next decades.