What if your money could keep making money? That’s what investing does for you. Instead of simply putting your cash in the bank, you can now make a profit out of your savings.
You may be asking: is investing worth it? While the process may sound scary for a beginner, the returns to investment can also be huge. This article will tell you all you need to know about where to invest your money.
1. The Stock Market
If you’ve ever asked anyone about investing for beginners, they will most probably suggest the stock market. Purchasing a stock means you will have partial ownership of a company. Therefore, when the company makes a profit, you will also make a profit by receiving a dividend.
Stocks are relatively easy to buy and sell, but the downside is that the market can be volatile. If a company isn’t doing well, the value of its stocks will plummet and you will end up losing money.
You can also purchase investment bonds. Bonds have the advantage of being less volatile – they are affected by interest rates or inflation but are in general quite stable. The return you receive from these bonds will also remain fixed.
According to leading experts offering financial advising in Singapore, bonds are perfect for individuals who are looking to invest but reduce their risk exposure. This is also a great way for first-time investors to get into investing. You can learn a lot by investing in bonds, without being subjected to the risks and volatility that other asset classes usually bring.
A disadvantage is that bonds are not very liquid and the fixed investment returns mean that you could have earned more by investing in a high-value stock.
3. Gold or Jewelry
Some people choose to invest their money by buying gold or jewelry. The value of these assets does not change alongside inflation, thereby protecting their worth over time.
Gold is also a great safety net for unforeseen circumstances when you may suddenly require emergency funds. The demand for the asset is unlikely to ever go down, so in the worst of times, you can still find people who are willing to exchange that gold for money.
These assets, however, do not provide you with any returns. In a sense, your money doesn’t lose its value, but it doesn’t increase in value either. It is also difficult to find a place to keep the gold.
One of the most popular investment platforms is real estate. Once you understand the local housing market, you can purchase some property and keep it over time.
The benefits of investing in real estate are that the value tends to be stable (excluding moments of economic crises) and you can also rent your property. Therefore, you’re not only waiting for the worth of your estate to increase – you can actively profit from it regularly.
However, real estate investment is easy to do wrongly. If you purchase a house that has a lot of problems regarding its infrastructure or location, you can’t easily back out of it. They will also incur extra costs over time, such as through maintenance fees.
Cryptocurrency is the up-and-coming market of this age. They have the potential of carrying high returns, but at the same time, the possibility of failure is quite high. You will have to understand technical analysis and know your way around cryptocurrency trends in order to fully profit from this option.
When you buy bitcoin, you can trade the crypto in the same way you would a stock. The techniques are therefore quite similar, although the crypto market is usually a lot more volatile. Because of the frequency of changing values, you can actually receive a high return for investment within a short period of time.
6. Managed Funds
A managed fund involves pooling together your investment with other people’s, and then the manager will buy or sell assets in your place. This is a great option if you are too busy to evaluate the condition of your investments – instead, the manager will do this for you. Some managed funds can also provide regular payments, therefore acting as an alternative source of income.
Keep in mind, though, that investing through managed funds involves paying the manager to sort out your money. If the economy is doing badly, a lot of people may rush to pull out their investments at once, causing a trustee to freeze the fund and prevent anyone from retracting anything.
Annuities are great investment tools when you are considering retirement. They involve you making a lump-sum payment to an insurance company, and in return, they provide you with regular payments over a certain period of time.
This is beneficial because you can treat it as an alternative source of income, and the money you receive from annuities will not be taxed. While the rate of return may below, you can still make some money out of investing in annuities.
Some cons of annuities include the high administrative fees (which may deduct any return you receive from the process) and the difficulty of getting out of such an agreement. Once you place your money in the hands of an insurance company, it becomes difficult to retract.
Is Investing Worth It?
Is investing worth it? If you had the choice between maintaining your money’s value or dealing with a bit of risk to double that value, would you want to do so?
At the end of the day, the worth of investments depends on each individual. It may seem like a risky process, but if you’ve learned how to invest well and understand the pros and cons of the different investing ideas, you can truly make something out of your money.
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