While it might sound surprising, but most of us seriously do not know what to do with our hard-earned money! Learning to invest money is a relevant lesson of life. No need for a college degree or enrolling in a specialized course for mastering this invaluable art. All you need to have is a basic understanding of business and be confident in getting ahead with a well-cut business plan.
As many say that investing can be a scary discussion, which has been since years, mainly because most of the families highly regard money and its expected related topics no less than a taboo in the house. This makes it imperative that you pick out your financial goal wisely and know the ‘why’s and ‘how’s of investing.
As many say that investing can be a scary discussion, which has been since years, mainly because most of the families highly regard money and its expected related topics no less than a taboo in the house. This makes it imperative that you pick out your financial goal wisely and know the ‘why’s and ‘how’s of investing.
Saving vs. Investing
Basically, investing is one of the best ways to get yourself financially independent and mature. A majority of us seem to use the terms ‘saving’ and ‘investing’ interchangeably, but there lies a stark difference between the two. While the former is the act of putting your money aside and not spending it, the latter focuses on letting that saved money grow so that the long term financial goals are reached in the best possible manner.
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| Ways to invest money |
Options for Investment
Few common ways to invest your money are as follows:
Bonds
Bonds typically fall under the category called fixed-income securities. When it is about the time of purchasing any bond, a particular amount or a certain money is lent to an organization or government. In return, an agreement is reached to give the owner the interest on the money and later the entire amount that was initially lent out.So if you are the type who would not accept lower returns even if it came with lesser risks, the market for bonds look strong for you.
Insurance
Often many seem to ask if life insurance is a smart investment and whether term life insurance or the permanent one holds more value. It is often a topic subject to debate. Term life policies are generally cheap, but often fail to offer any cash value like their permanent counterparts. If seen from the investment perspective, term life insurance helps in paying less in premiums so as to avail a relatively substantial benefit.
Mutual funds
Mutual funds include bonds and stocks. At the time of buying a mutual fund, many other investors had their roles to play. This naturally enables one to pay a huge authority figure like a manager for selecting certain securities. This investment strategy appeals to most given how time and experience constraints are absent here. Also, the returns are much better than what would have come out from choosing investments all by oneself.
Stocks
The reason why a stock market exists is because of allowing the exchange of securities between sellers and buyers to minimize chance of risks. Stock trading is a great way of investing, as it takes the larger market into account. Two basic ways to execute this trade process is via the exchange floor (like NYSE) or electronically (like NASDAQ).
Real estate
Real estate as an investment option has taken the market by storm within a short period of time. This market includes residential, commercial and industrial properties. Excepting national or global recession, the value of real estate is affected by local factors like jobs, education, property taxes and the likes. Though it has caught up with most people as vast opportunities lie in store to make profits, but the truth be told, buying and dealing with this can be highly complicated than bonds or stocks.
Commodities
Needless to say, commodities constitute a vital part of everyday living, which is why investors can choose diversification with this beyond the traditional bonds, stocks and funds. Given the increasing demand for commodities, investment in the form of ‘commodity futures contracts’ is chosen over other methods. Also, this is a less risky investment scheme.
Seed funding
Seed funding or seed angel funding is gaining momentum, especially for new companies having the onus of raising the seed money. It is the initial capital of any new venture, which, when funded helps a business climb up to a position to raise more money. There are also angel investors who offer a certain percentage in exchange of the control of the business or the startup company, but that happens at a later stage.
Bank deposits
The oldest and most preferred method for a large section of the present society is the option of savings accounts, bank deposits or credit unions. Owing to its safety and reliability in terms of keeping money and generating interest, this practice has not vanished into thin air. The only drawback are returns that aren’t as high as the others.
There are multiple investment alternatives, but you can be quite at ease at the start of your investment career. Beginning with something common and trustworthy can help you explore more opportunities requiring specialized knowledge in the long run.
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