Your savings need to be invested to grow your money. So, the main target is the rate of return. But sometimes, a higher return involves risks and you may even lose your money.

So, what important things should you consider before investing your savings?

The following key five factors will help you fix your investment plans to achieve your goal.

Return from investment

Our first target from investments is the return. How much profit we will get from our investment is the main factor to make decisions before investment.

In Bangladesh, a high rate of return you can avail by investing in savings certificates and bonds. Nearly 10 per cent of profit is available from these government-issued certificates or bonds.

Timeframe

The timeframe is an important consideration because the rate of return depends on the duration of investments. If you invest for the long run, your rate of return will be higher.

If you think that you do not need your savings for the next five years, it is perfect to go for long-term investments and you will get a higher return.

But If you require the money within one or two years, you will have to go for short-term investments and your return will be less than long-term investments.

Safe investment

Sometimes we tend to achieve a higher profit from investments to reach our target quickly. But such a decision may not be a safe investment option. So, while considering the investment option, you have to enquire about the organisation's reputation with the existing customers and the years of dealings with customers' money.

Risk control

Determine your investment tolerance. If you are able to take a high risk, the amount of return will also be higher. But if you are a new investor and the amount of savings is small, it is better to avoid the high risk.

Savings certificates and bonds issued by the government carry a lower risk compared to investments made into the shares of companies listed on the stock exchanges.

However, if you prefer to invest in shares, you will have to invest for a longer period considering the current condition of the market.

Tax benefits

Your return will be affected due to taxes. The tax shall be deducted at the time of profit disbursement on your investments. This means a lower return. So, consider where the tax rate is low so that you can avail the maximum return.

If you are a taxpayer, you should consider whether the investment will be considered for the tax rebate. Then, it will give you the maximum tax benefit as well as return.

The writer is the author of Smart Money Hacks