When it comes to treasury investments, you can choose from one or more of several key investment types. These types include foreign currency, equities, bonds, and credit.
A currency-linked investment enables you to earn a higher interest amount as you can select from a variety of currencies. You also can choose the period of your investment and the preferred strike price. When the investment reaches maturity, you receive the amount of the principal plus whatever interest is earned. You can receive the amount in base or alternate currency at the strike price that was pre-agreed.
Some of the Advantages
In summation, when you choose to invest in foreign currency, you avail yourself of the following amenities:
- A possibly higher interest rate on the investment.
- The ability to choose from various currencies, each designed to meet your requirements.
- The ability to obtain an alternate currency at a lower rate of exchange. This rate of exchange is associated with the exchange rate on the date of investment.
With these benefits also come several risks of which you need to be cognisant. That is why your much needed financial advisor in Malaysia can be of assistance. When you make an investment through a bank, he or she can be an invaluable resource. By working with an advisor, you can reduce the following currency risks:
- The risk of economics, current events, and politics affecting currency investments.
- The risk of losing part of the principal as the result of depreciation of the return alternative currency or the termination of the investment before maturity.
As noted, treasury-connected investments also include equities. Normally, you can choose from a large number of entities on the composite index. Equities offer potentially higher investment yields as well as the chance to buy shares at a discounted price on maturity. This customised investment also offers the flexibility of choosing a preferred underlying equity and conversion price.
Direct investments in bonds include choices between local and foreign currency bonds. Investors receive continual coupon payments and the opportunity to receive a capital gain if a bond appreciates. Bondholders receive the face value of the bond at the end of the investment period.
Another treasury offering is a credit-linked investment account. With this type of investment, you enjoy a stable source of earnings, which is based on a company’s creditworthiness. Returns are consistent and quarterly payments are made as long as an organisation does not experience a credit event. The returns on credit-linked investments are not affected by exposure to foreign currencies.
As you can see, investing in treasury-linked accounts can be lucrative. You also have the opportunity to take advantage of such investments as unit trusts and structured warrants. Premier banking services also offer a number of investment opportunities.