Investing your money can help you grow your net worth faster than the rate of inflation. This means that you are creating real wealth that you can use to start a business, help a child go to college or otherwise secure your financial future. What are some specific types of investment that you may be interested in?
Invest in Stocks
One of the most common ways that people invest is to buy shares of stock. Each share of a company you buy represents an ownership stake in that business. As the value of the company goes up, the value of each share will increase. Some companies even provide dividends, which is a return of capital to investors that can either be kept in the bank or reinvested into more shares of that company’s stock.
Invest in Debt
When a company or government agency issues a bond, what they are doing is asking you to help finance their debt. The money raised may be used to pay for new roads or a new public school for the community. It may be used by companies to fund the acquisition of another business or to help it build a new factory or other types of infrastructure. Bond payments are generally made over a period of many years and decades, and United States government bonds are seen as among the safest in the world.
Invest in the Future Price of a Currency or Commodity
Forex trading involves buying and selling currency in the hopes that it will increase in value while you own it. Conversely, you may be try to sell currency and hope to buy it back at a lower price to benefit from a downturn in a given currency. Gold or oil futures allow you to make money by speculating on the future prices of those commodities. Depending on where you trade, you could make hundreds or thousands of dollars in a single day. However, this type of investing may also involve more risk than buying stocks or bonds.
Invest Directly In a Startup Company
If you are interested in starting your own business or know someone who needs financing for their own idea, you may want to consider investing in a startup or small business. While there is the risk that the company could fail, investing at the very beginning could make increase the odds of seeing a large return. In some cases, you may be able to secure your investment with an equity ownership stake in the company or by placing a lien on its assets.
Hard Money Loans Can Generate Large Returns
Those who are interested in large returns with lower risk may want to become a hard money lender. Hard money loans are generally secured with a lien on the home and are further guaranteed by the fact that the loan terms are relatively short. Therefore, you may be able to get your money back in as little as month or less.
While it is nice to have cash in the bank, it could be doing more for you in the stock market or by helping other people make large purchases. If you are ready to start investing, it may be worthwhile to talk with a financial adviser who can help you establish a portfolio.