Disciplined investing is a great way to consistently grow your wealth over time. There are many different types of financial products and investments you can put your money into. Here are a few key investments and products that you may consider, and how CRM2Plus can help you track all of the investment decisions you make.
Picking investments in the stock market can seem risky because you have to rely on yourself to make wise decisions. There are many advantages to investing in the stock market. First, it can provide better returns compared to bonds and other investments. It has been shown historically that investing in the stock market has paid off and generated a 7% return on average.
In the stock market, there are many assets that you can put your money in.
Picking individual investments yourself means you have to do your own research to determine if a stock is undervalued and you suspect it to grow in the future. More often than not, you will be investing in common stocks of a company. This means shareholders “own” a proportional share of ownership in a company and the stream of cash those assets generate, and as the value of the business increases, so does the value of the stock. You also get to vote to elect the Board of Directors, which is a group of individuals who oversee major company decisions. With these upsides come disadvantages. Shareholders will also get a full share of the risk from the operations of the business. If business is bad, the stock value can decrease in value, or in the worst case scenario, the value goes to 0 if the company goes bankrupt.
Mutual funds and Exchange Traded Funds (ETFs)
These are very easy investments that even the novice investor can easily invest in. If you are a new investor, it may be easier investing in mutual funds or ETFs rather than individual stocks and bonds to get your feet wet in the game. The idea is that you invest your money into these instruments, where an online brokerage firm, financial advisor, or a robo-advisor will do all the work. You are able to invest in a broad portfolio of stocks and bonds in one transaction rather than trading each individually yourself. You can basically put in the money and sit back to enjoy the returns.
It is a safe investment since you are investing in a diversified range of stocks and bonds, and there are low transaction fees incurred investing this way; since you are only paying one trading commission or no fee at all.
Bonds are a form of debt security. As an investor, you can act like a bank and lend to the companies in return for an interest rate that they agree on paying you for a specific period of time. Bonds are very safe and low risk but generate lower returns. Make sure that the return is higher than inflation, otherwise, you are losing money. Bonds are very low risk as long as the company is in business. Investing in government bonds (t-bills) are close to zero risk, but also generate even lower returns.
Investing in real estate is a great way to invest if you have the time and energy to manage properties. This includes being a landlord and dealing with tenants, as well as dealing with damages and everything included in being a homeowner. It is definitely easier to invest in the stock market and not having to deal with rental properties and making sure that you are getting property in an area that will allow you to sell for a good return on investment.
There are other ways to invest in real estate without dealing with physical property. One is real estate notes. Someone would buy a pool of properties, and investors would invest in their project. The person who would manage the properties will pay dividends and interest to the investors. It is an attractive way to invest money without having to deal with being a landlord. Before investing in real estate notes, make sure that you trust the person managing since there is risk involved with trusting a person to be a property manager.
Investing in precious metals like gold and silver is designed to protect your portfolio against inflation. There are many ways to invest in precious metals. From ETFs that replicate the price of precious metals to buying the physical, there are several different options to invest in precious metals. They are tangible commodities that keep their intrinsic value, and can help retain a part of your portfolio value during times of economic turmoil. Despite the volatility in the metals’ prices, metals hold their value over time but have a low return. Investing in precious metals is a good way to diversify your portfolio and spread out risk.
With all of the different ways to invest your money mentioned above, always remember to maintain a diversified portfolio of investments. In other words, it is important to invest not just in individual stocks, but also to invest other assets such as bonds, ETFs, and various other products that are suited for your risk level. As you build your portfolio over time, be sure to learn all you can about proper diversification or consult a financial advisor and stick to those best practices.
CRM2Plus is an excellent vehicle to track all of these various types of investments. Our software makes it easy to analyze your entire financial picture in a few simple clicks. For more information about our software, please visit crm2plus.com.
Better also to keep some of your wealth as a cash in a saving account in an online bank that you trust that gives more than 2 percent return to reinvest or buy at lower prices the same stocks or some bonds when interest rates rise to get more returns …
Some people who have left cash , have bought stocks and real estate in late 2008 or 2009 when prices have dropped …