Are you looking to start investing?
First things first, you’ve made a savvy decision. Investing is an ideal way to grow your money and improve your chances of getting wealthy and achieving financial freedom.
Secondly, more than half of U.S. households have at least one investment. As you can see, you’ll be joining a good club once you become an investor.
However, making a smart investment isn’t a walk in the park. Far too many people have lost a lot of money in bad investments.
The good news is you don’t have to worry about losing your money. Yes, every investment carries an element of risk, but in this article, we’re sharing a couple of smart investments that’ll yield good returns.
Continue reading for deeper insight.
1. The Stock Market
For decades, the stock market has been the go-to investment destination for the vast majority of Americans who want to invest. It’s easy to see why.
A smart investment in the stock market will deliver excellent returns. Don’t believe us? Here’s a prime example.
Consider a person who invested $10,000 in Amazon when it launched its IPO. Back in 1997, one Amazon share sold for a mere $18. In 2020, amazon is at a whopping $3,400 per share. This person is now worth more than $12 million, assuming that they didn’t sell off some of their shares in the past.
You’re probably thinking, “well, 1997 was a long time ago. Will another opportunity ever arise?”
The stock market is the gift that keeps on giving.
Tesla is another example of how the stock market can make you incredibly rich. The electric-car maker’s share price has soared more than 400 percent in 2020 alone.
Excited about investing in the stock market?
The secret to being successful in this market is to identify the right stocks, make a purchase, and wait. If the Amazon investor sold off their shares once they hit $50 thinking that it wasn’t going higher, they certainly lost a chance to be a millionaire without raising a finger. But if they held on to the shares for more than two decades, they’re now basking in a boatload of cash.
If you don’t know how to get started investing in the stock market, it’s best to find a stockbroker. This professional will make investments on your behalf, and you can trust them because they have vast experience in this market.
2. Real Estate
The Financial Crisis of 2008, which led to the crash of the housing market, certainly discouraged a lot of people from investing in real estate.
We’re happy to report that this market has rebounded. Today, there are just as many real estate investors as there are stock investors.
What’s more, it’s more advantageous to invest in real estate than the stock market. You see, even if the housing market crashes and your home loses a lot of value, it’ll always rebound — given enough time. In the stock market, it’s possible to lose your entire investment – just ask the Tesla short-sellers!
That being said, the real estate market is vast. There are lots of different investments you can make in this market.
Here’s a lowdown of some of the top investments to make.
Did you know the number of Americans renting is at a 50-year high? Yes, more and more people are opting to rent than buy homes.
As a real estate investor, this is awesome news. There’s a strong demand for rental houses. As such, this is a smart investment to make right now.
Rental housing can be anything from high-rise apartments to single-family homes and log cabins. Before investing in rental houses, do sufficient market research to identify the best markets.
Have you ever come across a damaged or aging building and thought of buying it, fixing it up, and selling at a profit?
If yes, your thoughts aren’t far off. There are professional investors who buy such houses and sell them at a good profit, typically after repairing and/or remodeling them.
Do you want to venture into the business of buying and selling land?
You’ve made a sound decision. Raw land is just as profitable as investing in rental housing. Here, the trick is to find land that’s selling cheaply, often in an area with great growth potential, holding on to it for years and selling when its value has increased significantly.
Investing in commercial buildings is similar to investing in rental houses. The only difference is your properties are for commercial use. You could sell them to businesses or rent them out.
Investing in commercial buildings is more capital-intensive, so prepare yourself adequately.
Real Estate Investment Trusts (REITs)
There are people who want to invest in real estate but are turned off by the amount of work that goes into the investment. Perhaps you don’t fancy the task of building a rental house from scratch. Or you’re not sure whether you’ll make a good location choice.
Well, there’s an ideal real estate investment option for you.
REITs are companies that invest in real estate. All you have to do is invest in a REIT of your choice and wait for the profits to be shared out at the end of the financial year. It’s more like investing in a stock.
3. High-Yield Savings Accounts
Investing in a high-yield savings account is just like putting money in a fixed deposit account that pays interest.
As you can tell, the difference is in the name. A high-yield savings account offers substantially more interest than a regular savings account. These high-yield accounts are typically offered by online banks. They can afford to offer a higher return because they have a lower overhead compared to traditional, brick and mortar banks.
Like any other investment, perform due diligence. Ensure the bank you’re investing with has a solid reputation.
4. The Forex Market
The forex market is yet another lucrative investment destination, albeit super volatile.
Here’s how it works:
Let’s say you want to travel to Europe. You need to buy euros, right? To do this, you need to go to your local bank or forex broker and sell them your U.S. dollars in exchange for the currency you want.
Now, currency prices fluctuate every second. Often, the fluctuation can be so big that you make a good profit buying or selling the dollar.
The electronic forex market is more complicated than that, though. You don’t have to visit any forex brokerage or bank to do your trades. Everything is entirely online and in real-time.
This is a risky market, so it’s advisable to proceed with the advice of an expert. There are investment companies that have forex funds, which you can invest in, and wait for your profits.
5. Government/Treasury Securities
Do you want to make an investment that has the lowest risk?
Welcome to government securities.
The U.S. government issues treasury bills and treasury notes, which present an ideal opportunity for investors to make money.
With this investment, you’re basically lending money to the government. Depending on whether the security is a bill or a note, you’ll get your money back plus interest after six months, one year, two years, five, ten, or even 20. Long-term securities tend to yield a lot more than short-term securities.
The amount of money you make from your investment will also vary depending on the interest rate, the demand of the security, and the security’s face value at maturity.
Besides treasury bills and notes, there are also government bond funds. This fund collects money from a wide pool of investors, and then invests in treasury securities. This is because investors stand to make more money from treasury securities when the money invested is massive.
6. Corporate Bonds
Just like the government, big corporations need to raise money from time to time. One way to raise these funds is to borrow from the public.
This is where corporate bonds come in.
Corporations issue these bonds to the public. When you buy a bond, you’ll earn an interest when the bond matures, usually in one to five years.
Unlike government securities, corporate securities carry a high risk. They’re not insured by any government agency, which means you could lose the money if the corporation collapses or doesn’t have the money to pay back investors.
Make Smart Investments Every Time
It’s possible to get a job that pays you a salary that’ll make you rich, but why bank on that when you can invest and get rich? As long as you make smart investments, like the ones described above, nothing stops you from being successful.
All the best and keep reading our blog for more investment tips and insights.