Quora Answer: What is the Best Type of Investment for a 33-Year-Old, with $100,000 in the Bank?

The following is my answer to a Quora question: “I am 33 years old, this year, and have $100,000 in the bank, earning very little interest.  What is the best type of investment for me, in 2016?”

You must understand that the bank in not there to make you money; the bank is there to make the bank money.  If you had more than a million, or in some banks, $2 million in assets and an annual income above their quantum, you would be eligible for their private banking services and products.  Your current amount does not qualify.  As such, even a fixed deposit would not have competitive returns.

On one hand, you can consider mutual funds or any sort of collective investment scheme.  There is no capital guarantee, unlike fixed deposit, so it is classed as a higher risk class of investment.  On the other hand, if you want some element of estate creation, which is a form of capital guarantee, you can put the funds in an investment-linked plan.  They are both more liquid than a fixed deposit should you need to draw on the funds.  And they both have good potential returns of at least 6.5%.  And they both have a slew of funds that you can shift your money around.

The idea here is to spread your risk across several markets and sectors between debt and equity securities.  Generally, I would advise a pivot to Asia if you have a medium to long investment horizon.  The US market fundamentals are not sound, and very susceptible to the boom and bust cycle that plagues it.  Also, their regulation is weak, meaning that your money is not as protected as it should be.  Europe is risky for several major reasons all tied to the Eurozone debt bomb.

I am generally bullish about Asia, particularly East Asia.  Since your money is in funds and not direct counters, you are insulated somewhat from the volatility of the market.  And since this is a long strategy, you should not be bothered by minor shift in the market that have market watchers panicking every now and then.  You have to understand that the major players need to engineer panics now and then so that the sharks can feed when smaller players dump their funds.  An example would be the recent quantitative easing in the China market that had the Financial Times and many major publications talking about a meltdown, and the Shanghai bourse dropped precipitously.  When things like this happen, always step back and relook the fundamentals.  In this case, for many reasons, China is fundamentally sound in the long run, and things look good for the rest of East Asia except Japan, due to its persistent negative interest rates.