Dividends are an important factor of investment as they can help you understand the financial health of a company. Some typical “safe investment” examples are utilities and banks.
Level of interest (interest rates)
You can finance most investments through savings or by getting a loan. However, if you plan on taking out a loan, remember that interest rates significantly impact investments. Borrowing is much more expensive when interests are high, and you get a better return rate from putting your money in the bank.
For investments to be “good,” they need to have a higher return rate than interest rates. When interest rates grow, investment profitability drops. However, if the investment rates drop too low, fewer banks will be willing to give loans, leading to a lower number of investments.
Many investors save up money at a bank to have the necessary funds for their investments because banks lower interest rates. High rates make investments even more difficult as they mean lower returns and little room for error.
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