Investing is the act of spending money to generate steady income or appreciation (an increase in value over time).
Because of this, investing in itself is a risk (because of the potential to lose money by not gaining anything), but when done correctly it can be a way to generate wealth. It can be hard to know exactly which types of investments are worth it since losing money is possible.
Here’s a look at four of the easiest types of investments to get started with, and which ones have the potential to generate a lot of money.
Stocks are pieces of a company that can be owned by individuals who invest in them. Investing in stocks has been an activist for decades, and it’s one of the best and easiest investments you can make today.
Stocks are typically known as “safe” investments because while they are still a risk, they’re not as risky as other investments and there’s a high ROI (return on investment). Just keep in mind that they don’t add much diversity to your investment portfolio, but they’re good investments for first-time investors.
There are also stocks called dividend stocks where payments are made to shareholders regularly.
#2: Real Estate
Real estate is a more expensive investment, but it also offers a great ROI. It’s one of the best investments for diversification, and investing in real estate is a great way to protect against inflation. The reason is that when you own a property and rent it to tenants, you can raise the rent to help keep up with the increasing prices due to inflation. There are also different types of real estate that you can invest in.
Different Types of Properties
The most common type of property that most people invest in is a residential property, which can be a vacation rental property (and other single-family homes) and multi-family homes such as duplexes, quadruplexes, and even apartment complexes. These properties are rented to people and the property owners make money from the rent paid by the tenants.
You can also invest in commercial properties, which are buildings like malls and other shopping centers, hotels, office buildings, and even industrial buildings like factories and warehouses. Owners of commercial properties make money the same way owners of residential properties do.
REIT stands for real estate investment trust, and it’s a way for people to invest in more expensive commercial properties. REITs are owned by companies, and investors can buy a piece of the REIT. They’re similar to mutual funds, and they offer regular dividend payments to those who own them.
#3: Savings Account
A savings account is one of the easiest investments that anyone can make. You can choose an online bank or a traditional bank (although you can earn more from online banks) to open a simple savings account.
When you put money into a savings account, you’re able to earn interest on it. It isn’t much interest— unless you open a high-yield savings account— but it’s still a great way to accumulate money over time, especially if you’re constantly putting money into the account yourself. Online banks offer these high-yield savings accounts, allowing you to earn more interest due to their lower overhead costs.
When talking about finances, a CD stands for a certificate of deposit, and it’s a type of savings account that has a fixed rate and a fixed term. They also work in a very similar way to a regular savings account (both an online bank and a traditional one), but one of the biggest differences is that a CD requires only one deposit most of the time, and you can’t make any additional deposits like you would with a regular savings account. You also can’t pull money from it like you can with a savings account, until the term ends.
CDs tend to have higher rates than savings accounts, which is why some people choose this option instead. Savings accounts’ rates can also change over time (for better or worse), but CD rates are fixed.
Not every type of investment will be profitable for everyone, so it’s important to do your own research before you begin any type of investment. Savings accounts and CDs are usually the safest types (they come with fewer risks), but they’re not the best ways to earn a steady stream of income. If that’s your goal, you’ll want to look into dividend stocks or real estate/REITs.