Beware of low risk small investments

Investments known as market-linked bonds are being advertised as risk free, and as much as £20 billion has been spent on these relatively small investments. However, the guarantor of these bonds is whichever bank or company you purchase the bond from, meaning your investment is only as safe as the place where your purchased it.

Having a guarantee from a bank, building society or long-standing investment company may feel safe but that is how many people felt about Lehman Brothers, which completely collapsed in 2008 leaving its investors penniless. This is proof that even the larger named money men are at risk of losing the lot. NDF investors also lost out through the Lehman Brothers collapse, when it emerged that they were the guarantor for all NDF's investments. Whether you're thinking of making large or small investments there is always a risk you will lose more than you paid into it. A common rule of thumb with investing and saving is never put in more than you can afford to lose.

When looking for small investments remember just because the money you are investing is low, doesn't make it any more safe. You should also remember that these risk-free financial products are only as safe as the financial institution that is backing it. In the age of the credit crunch and a recovering economy, nothing is really considered safe anymore. Northern Rock and other banks all had to turn to the government for financial assistance or face going under, this should act as a warning. Enjoy your investments, take the proper reputable advice and ensure you are fully aware of all the potential risks, no matter how small, before you part with any money.




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