What Kind Of Investments Can Help Grow Your Money?

If you’re looking to grow your money, then it’s important to start putting that money to good use. The greater your plans for the future, the more money you’re likely to need, and the sooner you should start saving and investing if you haven’t already. One of the key strategies for investment is the diversification of your portfolio. 

Savings accounts

One of the most traditional tools for future financial preparation, savings accounts are, most of the time, the safest place to put your money for the future. That said, they’re not entirely disaster-proof, no financial investment is. What’s more, unless you can find some truly competitive accounts, they tend not to offer the best long-term gains on your money, due to the fact that they rarely even keep up with inflation. A good place to keep money that you intend to keep liquid so you can use it sooner rather than later, but unless you can find a truly competitive interest rate or a savings account that lets you keep savings tax-free, there are better tools for growing your money.

Retirement savings

There are different forms of retirement savings products that you can start to put your money into. The most commonly used is the pension, which allows you all manner of benefits that other savings don’t, such as tax relief. If you’re employed, then your employer can match your retirement savings up to a certain threshold. It’s almost always recommended that you max out your employer’s retirement contributions rather than putting the money that would go into that in other investments or savings. After all, if your employer matches your contributions, you are already growing the money that you put into your retirement by 200%, before any interest rates start to apply. It’s a no-brainer of a choice.

Real estate

While investing in property can be very rewarding indeed and, at the moment, it’s one of the assets most in demand so not likely to lose its value any time soon unless there’s a burst in the market, it’s also challenging. Flipping properties requires you to be able to make maximal improvements on minimal investment to resell at a much-increased value. Renting out a property is another to gain income, though it’s not quite as passive as stocks with dividends, as managing a property can easily become a full-time job if you let it. Of course, you can work with a property management service to take care of the work for you, but this will cut into your potential profits.

People even like to hire a rent collection agency that helps collect rent from tenants. This creates a worry-free investing experience for you as the property owner.

Stocks

Perhaps the asset that you’ve heard the most about when it comes to investing, stocks, also known as equities, are shares of ownership in a company that is being publicly traded. They are directly representative of the overall value of the company that you’re buying stocks in. The more a company grows, the more profit it earns, then the better it does in general, and the more the value of the stock is likely to rise. Of course, lost earnings and other negative outcomes result in a stock losing value. There are different kinds of stocks available, and while we will be looking particularly closely at one kind, in particular, there are a few differences to note. Growth stocks are those that are in the middle of growing faster than others, while blue-chip stocks tend to be those companies that are most trustworthy and stable as well-known and large names.

Dividend stocks

The one kind of stock that requires a little extra closer look, is that of dividend stocks. On paper, they work much the same as regular stocks, they are shares in a company that gain and lose value in conjunction with that company’s performance. Like regular stocks, you can sell your dividend stocks for their total value if you stand to gain a lot of money from doing so. However, dividend stocks pay a share of their gains, aka dependable dividends. This can allow you to set yourself up with a stream of passive income, so not only are you gaining money for the future, but you’re getting a little extra for right now, as well.

Bonds

Bonds are often positioned as a direct contrast to stocks. Unlike stocks, they don’t represent shares in a company, but are fixed-income securities, essentially a loan to the issuer of the bond, which is usually a government or a large organization. Bonds are typically less risky than stocks (though no investment is ever completely without risk, as mentioned before) but they also typically do not return the same level of financial growth as a successful stock. As such, a good strategy is to diversify, weighing your bonds and stocks depending on how much risk you intend to take on, and how much you’re looking to grow your wealth by in the best-case scenario.

Mutual funds

When you’re investing in individual assets, you need to pay attention to those assets. You’re not tracking the value of all your stocks together, for instance, but rather the performance of each individual stock you invest in, making sure that you’re on the button when it comes to buying and selling. Mutual funds don’t require you to pay as much attention to the details of every asset you’re investing in. They are a fund that brings money from multiple investors, which is then invested in a range of stocks, bonds, and other assets. These are typically managed by experienced financial experts, which means you do benefit from some insight and knowledge to boost your investment outcomes, but you can also expect them to take their cut for the trouble.

Forex

Forex trading is based on the same kind of currency exchange that any individual would encounter if, for instance, they’re changing their money to go travelling, or they’re buying from an overseas store. Rather than directly putting your money from one currency into the other, however, you are directly investing in the value of one currency as it related to another. For instance, if you invest in a USD>GBP, then if the value of the US Dollar went up in comparison to the Great British Pound, the value of our investment would go up. You’re investing directly in the exchange rate of the currencies/. Forex can be a complicated field to invest in, which requires you to pay close attention to the relationships between economies of different countries if you want to get it right, but those who are willing to learn can find relationships that are more dependable and more likely to ensure gains.

Crypto

One type of asset that has been getting increasing interest and publicity over the past decade-plus is cryptocurrency, and related investment projects making use of blockchain technology. Cryptocurrency is effectively a digital currency that is not managed by any centralized bank or financial organization, but independently runs based on a blockchain ledger. While crypto is not quite yet widely used as a currency, it has become very popular for certain online purchases and even more so as an investment asset. You can buy and sell ethereum and other currencies easily online, and a lot of people have seen truly major gains from them. However, close attention has to be paid to the various crypto projects you are involved in, as a lot of their value is derived from a speculative interest in their developments and future usability.

A different way to invest in real estate

Aside from investing in real estate in order to sell or to rent it out, there are also ways to invest in real estate as an asset without needing to be quite as hands-on with the individual properties, themselves. The most common way to do this is through a real estate investment trust, or REIT. This is similar in ways to a mutual fund. An organization or trust pools investment money from a range of investors, which then goes into several income properties. Unlike a mutual fund, however, a REIT has to pay out 90% of its taxable profits as dividends, so it can create an even stronger form of passive income.

Annuities

Annuities, which are often used as retirement tools, are effective insurance agreements. You pay an insurance company, either in one lump sum or installments, and they will make payments to you in the future, typically during your retirement. There are fixed annuities, which have a fixed interest rate, as well as variable annuities, which have a fluctuating interest rate based on the assets that the annuity fund is used to invest in. Fixed annuities tend to be more reliable and stable, but there’s a potential to gain more with a variable annuity. 

How you make use of this variety of investments to reach your own financial strategy is down to you. This is not an inclusive list either, so plenty of research should, by all means, follow. However, if you want to get investing, this is where you should start when it comes to getting to know your options.