Investments are incredibly important to safeguard your money for the future. In fact, all financially responsible persons and households should have an emergency savings account, a retirement fund, and investments. Investments generate passive income, protect your wealth, and you don’t need to have a degree in finance to master it. However, as with anything, investing should also begin with baby steps. Read below for some simple methods to invest your money as a beginner to the industry:
You don’t have to study stock indexes to invest your savings in fixed deposits. A fixed deposit is a type of account offered by large banks and financial institutions. They work quite similarly to a savings account. For example, say you have 1,000 dollars that you want to invest. That might not be a large enough sum for high yield investments ventures. You might also not be comfortable with navigating market indexes just yet. If this is the case, you can ask your bank to put your 1,000 dollars in a fixed deposit. Once you do, you cannot withdraw the money until the fixed deposit has run its course (which is usually between 2 to 5 years). Fixed deposits often have higher interest rates than savings accounts. They are a convenient and largely risk-free method to begin investing.
Rent the Basement
Real Estate is one of the hottest ways to invest money. However, it is also one of the riskiest. When you are just beginning to invest in real estate, you might not have enough capital to develop seafront houses or sell commercial property in the city. But, there’s still a way for you to invest in real estate. If you already live in a house that you own (or will soon once the mortgage is paid off), you can become a realtor by renting unused space. For example, if you have a basement that you rarely use, you can clean it up, do basic renovations like crawlspace waterproofing, insulation, plumbing repairs, etc., and rent it out. Once you get the hang of being a proprietor, you can save money and buy lucrative real estate to generate high returns.
If you have a significant amount of savings, and you want it invested in a largely risk-free venture, then government bonds are a good option. U.S. government bonds are known to be quite safe. The interest rates may be low than for certain stocks, however, you can expect to cash in on a government bond when it’s due in a couple of years. Beginner investors should be aware that government bonds incur less risk, but are not zero risk investments.
Precious metals like gold are an excellent way to diversify a portfolio and protect your finances in case of an economic downturn. When the value of the currency goes down, the value of gold goes up. So in a way, protection against inflation is taken care of if you invest in gold. You can be assured that during a financial crisis, gold will hedge you against devastating losses. You can invest in companies that mine gold, or buy gold directly as bars or, more conveniently, as jewelry. You may have to look for sources to purchase gold. While in most countries, you usually cannot buy gold from a bank; however, if you have a large amount of money and the bank is providing such a facility, you can look into this option as well.
If you are a beginner investor, the above methods will be a great way to learn about how the industry operates. Do not jump headfirst into high-risk investments. Try one or two of the above first.