Leaving your savings lying idle in your current bank account was never a good idea. Taking the current wild situation and inflation sky-rocketing to record highs in consideration, makes valuing your funds even more important. That’s why we’ve put together a brief overview of the ten best ways how to invest money.
How to invest money – cryptocurrencies
Technology has been the driving force of the 21st century so far, having brought loads of innovations in many different sectors. Cryptocurrencies are a perfect example of this phenomenon. As such, this investment instrument has experienced a huge boom in recent years. Many investors have profited from their purchase and although it is a relatively difficult investment to predict, the potential returns can be substantial.
However, your portfolio can certainly include more currencies than the flagship of crypto, Bitcoin. BITmarkets, for instance, a broker specializing in cryptocurrency investments specifically, you can invest into more individual tokens. Overall, if you are determined to educate yourself in the field, the decision to try to multiply your funds in this way may put a smile on your face in the future.
How to invest money – common funds
This type of investment is usually easy to access through the commercial bank you have an account at. You buy a ‘unit trust’ and the investment company (the bank) then manages your funds according to predetermined rules. This means that if you put your money into a money market fund, for example, it will be invested in securities such as bonds.
The fund may invest in shares, bonds or other funds. All unit holders are then affected by any gains or returns as well as losses. Each of them can then have the investment company redeem their units at the current market price.
How to invest money – stocks
Investing in these assets of individual companies has been a well-known and fairly proven practice for years, although of course, similarly to the other tips in our article, there is a certain amount of risk involved. Moreover, entering the stock markets has never been easier than now, as nowadays you just need to open an account via an online broker and start trading within a few clicks.
Every single share actually symbolizes a piece, which all together make up the value of a given company. When the overall market value of a company increases, the share price also rises, so if you choose well, you can make a very good profit on buying these securities and then selling them. Some of the companies even pay their investors regular shares of their profits, called dividends.
However, shares can also be traded using CFDs (contracts for difference). When trading them, the broker agrees to pay the difference between the purchase price and the current value of the share without any transfer of ownership. However, if the price of the share falls, the investor then loses money, which is transferred to the broker. One of the many companies through which you can trade shares is Capital Panda.
Do not miss: Capital Panda broker review
How to invest money – stock indices
Trading stock indices is a special way of trading stock. These represent a package of selected stocks, combined into a single unit. The value of the whole index therefore rises and falls with the prices of the shares contained in the investment instrument. Unlike buying the stock of one company, you take less risk – if your chosen company goes bust, it’s not such a big deal with indices, because the index also contains shares of other companies.
Some of the best-known indices include the S&P 500, which contains the 500 most important companies in the US. Also relatively popular is the NASDAQ, which focuses mainly on stocks in the technology sector, or the Dow Jones Industrial Average index, which consists of the prices of the 30 most commonly traded securities. You can invest in indices with Profitlevel, for example.
Click here to read our Profitlevel review
How to invest money – startups
Last but not least, there is the opportunity to invest in start-ups. If you believe that a given project can be successful and succeed on the market, you can agree on the exact terms regarding the payment of a share of profits and so on after consulting directly with the founders of the startup.
The absence of any intermediary eliminates the need for any fees, but you have to be careful. The future profitability of such an investment is directly dependent on how the company performs. If it fails, you could lose your money relatively easily.
How to invest money – Forex (currency pairs)
Trading currency pairs works purely on the principle of speculation and prediction of the value of individual world currencies. Investors exchange their funds between currencies to increase the overall value of their capital. However, it should be noted that this type of investment is relatively risky, especially for newcomers. It is therefore a good idea to educate yourself properly before trading Forex.
As with commodities or stocks, the services of online brokers can be used. Among those, you can for example find Gulf Brokers Ltd., which we also reviewed on our website.
Also read: Gulf Brokers Ltd. review
How to invest money – bonds
A bond investment, like a stock, is an investment in a security. However, the difference is that while the returns on shares are linked to the activity and possible success of the company on the market they are predetermined when it comes to bonds and their payout is fixed on specific dates. A bond has a fixed nominal value and interest, which can be variable.
However, it is important to check the creditworthiness of the issuing entity before buying a bond. This is due to the fact that it is possible inability to repay can put you in an uncomfortable situation. Government bonds issued by individual countries are considered the least risky investment. At the same time, however, they usually offer a lower interest rate than those issued by, for example, various corporations or banks, which makes them not very profitable in the current high inflation environment.
How to invest money – commodities
Commodities are in fact homogeneous products that are traded in the market at a uniform value and quality regardless of the supplier. They include, for example, oil, natural gas, metals and so on. Most of the brokers, whose reviews you can find here, also offer just the possibility of investing into commodities.
The process is usually based on the principle of the already explained contracts for difference, so investors do not become the physical owners of the commodity. Same as with shares, there is both the possibility of making money and the risk of losing money. In addition to other companies, you can buy and sell these investment instruments with Libertex, for example.
Do not miss our Libertex broker review
How to invest money – gold
Gold is probably the most specific commodity, which is why we have decided to devote it its own chapter in this article. Investing in precious metals, gold in particular, is a capital appreciation option which has been used for a long time. In fact, its value is practically always increasing.
However, with the current market situation and rapid inflation, it should be mentioned that investing in gold may not actually pay off at all. While the returns are relatively guaranteed, on the other hand, their value is minimal compared to the initial investment.
How to invest money – real estate
Due to the relatively constant increasing of their value, real estate is often described as a relatively safe investment with a solid return. In addition, buying a house or an apartment does not only bring the opportunity to sell it later at a higher price, but also the possibility of passive income from renting the property.
However, as a significant drawback of investing in real estate, I must mention the fact that a relatively large capital is needed for the initial purchase. However, if you have a decent stock of funds, you should at least consider this opportunity for their appreciation in our opinion.