The finance world is growing at a rapid rate, and there are more people every day that are intrigued by it. It seems like there are people everywhere telling you that you can get rich quickly by doing something. Money dominates society, and money helps solve a lot of problems. However, in order to accumulate wealth, you need to let your money work for you. These five investment options are ways that you can make your money work for you.
A government bond is a loan that you are providing to some form of a government entity. It is an agreement between you and that government entity that upon the completion of the contract, the government will repay you the amount that was loaned. On top of that repayment, the government will also pay you interest on the loan over a specific period of time.
This investment is essentially a risk-free investment due to the borrower being the United States government. However, this type of investment is not a super lucrative investment. Typically, these government bonds are investments that are made by risk-averse investors that would like to see small consistent returns in their portfolios. If you are looking to invest your money safely and receive little amounts of dividends added to your portfolio every so often, then this is a great investment option.
A mutual fund is a fund that is managed by an individual, or group, that pools money from multiple investors in order to invest in individual stocks. Based on the mutual fund that you are investing in, the fund will take your money and invest in a variety of different stocks. This gives you portions of single stocks in many different companies.
This is another investment that is on the safe side of the spectrum. It is slightly riskier than government bonds because your money is being invested in individual stocks. However, your money is being spread across so many different stocks that there is little risk involved. This is a great option for risk averse investors who are looking to invest their money in individual stocks.
An index fund is somewhat similar to a mutual fund. In an index fund, your money is spread amongst multiple companies similar to a mutual fund. However, in an index fund, a particular market index fund is selected for the investment. A couple of examples of index funds are the S&P 500 and the Dow Jones.
This type of investment is best for those who are looking for long-term savings but do not want to pay management fees that accompany mutual funds.
Individual stocks are what everyone thinks about when they hear the stock market. This type of investment would be placing a quantity of money in a single company or multiple companies, and that would give you shares of that company. Owning shares of a company means that you are part of the ownership of that company, and your wealth is determined by the performance of that company. The company’s performance will cause the stock price to change, which will then increase, or decrease, the value of your investment.
Of this list, individual stocks may be the riskiest form of investment. To make safe investments, you will want to do a great deal of research when investing in individual stocks.
There are numerous benefits of investing in real estate, to name a couple it includes passive income, stable cash flow, tax advantages, diversification, and leverage. Cash Flow is the main income from a real estate investment, once the mortgage and operating expenses are paid off. Something to also keep in mind when looking to buy either a house or building, you can depreciate the cost of a building but not the land. As Real Estate value tends to increase over time, it can be a great profit if you plan to sell a home or building that has appreciated in the market.
Real estate would be the only tangible investment on this list. Meaning that this type of investment would be the only one that gives you ownership in a tangible/physical item. If you are looking to invest in real estate you may want to look into Delaware statutory trust companies. These companies are able to advise you on specific properties that would be worth investing in and help you in doing so. The real estate market can be very competitive and it varies in which cities and states you are looking to invest in property, so having good resources to help you with the process and to help advise you is very important.
All of these investment options are great ways for you to invest your disposable wealth. However, you must consider which option suits you best. Investing in something that does not align with your current situation can make you worse off, so it is incredibly important that you think through your investments prior to making them.