How you invest your money can make all the difference in whether it grows or stagnates. The wrong investment choice could leave you with less money than you started with, but if you choose wisely, your hard-earned cash can grow into more than you ever imagined. This guide will cover some of the best ways to invest money so that it can work harder for you and support you in your future goals and dreams. From mutual funds to crowdfunding platforms, there are numerous options available to grow your nest egg from the ground up with minimal effort required on your part.
Stocks and Bonds
If you’re looking to invest your money, there are many different ways you can go about it. For example, buying stocks and bonds is a great way to boost your portfolio. Stocks represent ownership in a company and bonds are debt issued by companies or governments. Even if you don’t want to be actively involved in managing stocks or purchasing individual bonds, you can still profit from their gains through investment funds that own hundreds of individual securities at once, but charge fees for their service.
Mutual Funds
As you begin to invest money, it’s a good idea to start by using a mutual fund. Mutual funds are an easy way to invest in multiple companies at once and they can be purchased through online brokerages. That said, just because they’re simple doesn’t mean they aren’t without risk—mutual funds can drop in value just like individual stocks can. Investing $1,000 into a growth fund could earn you anywhere from $20 to $200 within months or even weeks. However, if it doesn't make much progress for several years or even drops in value, your initial investment might not be worth as much when you come back for more later on down the road.
ETFs
In general, ETFs are considered safer and more stable than individual stocks. If you want to invest money safely but don’t want to tie it up in a longer-term investment that may go south, consider investing your money in an ETF. However, if you invest your money wisely (and over time), ETFs can actually generate significant returns. For example, investing $1,000 into a broad market index fund—like one that tracks Standard & Poor's 500 Index—will likely yield roughly $1,000 in 10 years if you reinvest all dividends. That’s certainly not earth-shattering growth by any means, but it is modest return on investment (ROI) of roughly 7 percent per year. Investing $1 million would turn into just under $2 million after 10 years at 7 percent ROI — which could be enough to retire on!
Peer-to-Peer Lending
Investing your money in peer-to-peer lending platforms like Lending Club or Prosper is a great way to put your capital to work for you. Investors can get started with as little as $25 and invest in loans of all sizes, from small personal loans to business loans. Peer-to-peer lenders earn returns on average between 5% and 8%, depending on which platform they use and how much risk they are willing to take. And unlike investing in a mutual fund or buying stocks, it’s easy for anyone to open an account and start putting money to work without paying fees of 1% or more per year—or relying on other people’s performance when it comes time to cash out.
Real Estate
Investing in real estate is one of the safest ways to make money because you have a steady return on your investment. Real estate investments can be risky if you don’t do your homework, but with some basic knowledge and due diligence, you can ride out even severe market downturns.
Crypto
With low barriers to entry and a simplified setup, one of the easiest ways to invest money is to buy cryptocurrency. Once you have digital money in your hands, though, you’ll need a way to store it securely. Just like investing in a company stock or commodity contract can be risky, so too can holding on to cryptocurrency. Wallets are safer than exchanges but still vulnerable if hackers are able to crack their codes. It may be worth considering using a hardware wallet—like Trezor or Ledger Nano S—to secure your private keys and reap all that crypto has to offer without sacrificing safety.
Conclusion
Investing can seem like a complicated concept at first, but when broken down into its simplest terms, it becomes much clearer. Before you put your money into anything you don’t understand (or worse, before someone else invests your money for you), make sure to do your homework and speak with a professional. Doing so will ensure that you invest in a way that will help build your future and make it last.
