Final Word from Friday, January 18, 2008
The days of parking your money in a time deposit, mutual fund or Prague investment property and sitting back and counting your profits might be over. Some investment advisers say that if 2007 was the year for wealth accumulation, 2008 is the year for wealth preservation. And merely preserving your wealth could mean engaging in more-active money management than ever before. Today's winners, such as the crown, real estate or gold, could be tomorrow's losers, because of heavy market volatility. A conservative strategy could be to convert crowns into euros at today's near-record rate and put the money into euro certificates of deposit, which pay better than crown accounts. A correction in the value of the crown could bring a gain in both directions. You still might not beat inflation, as MFD pointed out this week, but you won't likely lose your shirt either. But of course that's a strategy for today. Tomorrow everything could be different.[Czech Republic MF Dnes currency appreciation depreciation]
Glossary of difficult words
wealth preservation - planning that focuses on retaining wealth, as opposed to increasing it;
to park money - to place money in an investment and pay little attention to it until it is needed;
time deposit - a deposit that cannot be withdrawn until a set date, or for which a notice of withdrawal is required;
mutual fund - a fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, money-market securities, etc.;
volatility - characteristic of a security, commodity or market to rise or fall sharply in price within a short-term period;
correction - reverse movement, usually downward, in the price of a stock or commodity;
a gain in both directions - a gain on the higher euro interest rate and the appreciation of the euro vs. the crown;
to lose your shirt - to lose all of your investment.