When we decide to invest our savings, financial instruments can offer us an additional source of income. The range of financial products is wide and the saver can choose how to direct his investments, after having assessed the level of expected return, bearing in mind that the higher the yield, i.e. the assumed gain, the greater the "risk", i.e. the possibility of losing one’s savings.

Financial investment products

The investment savings products are in effect credit instruments, that is documents that identify us as creditors, in this case the paid sum that we have invested. There are various families of investment products, more or less risky. The main ones are below. Today, the financial market is very diversified and, on the website of your bank, you can discover other investment opportunities. 

Shares:unitary, identical and homogeneous individual portions, in which the capital of the companies SpA - joint-stock companies - listed on the Stock Exchange is divided. Those who buy the shares acquire, at the same time, the status of a shareholder. The shares are divided into various categories: ordinary shares, preference shares. The place where they trade is the stock market, the Stock Exchange;

Bonds:represent a portion of the debt that a company/enterprise or a public body activates to finance itself. Guarantee to the holder, who acquires the status of obligee, a repayment of the capital plus the interest provided for in the contract. 

Shares and bonds: what is the difference?

Government bonds

These are the obligations that the Ministries of Finance of the various Countries periodically issue on behalf of the State to finance the public debt or its own deficit.

Mutual funds: are financial instruments managed by companies specialized in diversifying invested savings. They collect the capital of big and small savers by uniting them into a single asset. They are divided into unitary parts, called quotas, which guarantee equal rights. These investments are on average safer, guaranteed by a certain diversification in the composition of the securities, by an asset management made by professionals.

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Derivative contracts. They are called thus because they are a category of products that "derives" from another. Their value depends therefore on the performance of another financial or real asset - a variable called underlying - represented by shares, interest and exchange rates, raw materials - oil, cocoa, coffee, gold... These are highly risky.

The Stock Exchange

The stock exchange is the place where stocks are traded, in a broad sense it is the financial market where securities, currencies are traded ... With the telematic exchange market, trading takes place directly online.

More information…Stock exchange indicators. These indicators express the trend of a basket of stock securities of the main companies and enterprises listed on the stock exchange in a given country. 

Supervisory and control bodies. The financial market is overseen by control bodies. At European level the ESMA (European Securities and Markets Authority) has been in place since 2011. In the individual countries control has been entrusted to the Ministries of Economy and Finance, to the Central Banks - in charge of risk containment and the stability of the assets - and to other specific bodies.

Helping savers to choose the most suitable product

The relationship of the saver with his Bank must be based on trust. Each bank provides its clients with an expert financial consultant who has the task of directing choices in the "jungle" of financial products, explaining their characteristics, and risks, indicating the most suitable for the needs of the individual investor, defining the best strategies together with the client. In general, savers should rely on the financial advisor and give preference to diversified investments for their savings, in order to protect themselves as much as possible from risks.

Also in the field of investments, banks provide practical applications for Smartphone, with which savers can anywhere in real time monitor their investments, follow quotes, and buy and sell securities. Also in this case, security and privacy are guaranteed by access systems, with code or with a digital fingerprint.

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In 1929 a famous financial crisis was provoked by a fast-paced rise in prices concerning the US stock market. With the collapse of the securities, the shareholders ran to the banks to withdraw the cash. It was the first crisis that, born in a Country, had major global repercussions and showed the interdependence of financial relations between Countries.

About Government Securities

How to evaluate the soundness of the securities issued by the State, public bodies, companies? The rating assesses its reliability and soundness. This is carried out by special agencies (e.g. Standard & Poor's) that express their valuation in letters.

The lower the rating scale the greater the risk for savers and consequently confidence in the securities issued by a given country, measured by the spread, a "thermometer" that compares the performance of the Government Securities of a Country with that of the Government Bonds of another Country, in Europe the German Government Bonds. When the spread increases, it means that the markets do not trust and demand more interest.