Investing is a great way to double your savings, prepare for any emergencies and ensure a comfortable future for yourself. The Coronavirus pandemic is proof of how crucial it is to have more than one stream of income, rather than relying only on a 9-to-5 job. Individuals unprepared for emergencies are dealing with a financial crisis. However, those who believe that it is essential to invest and create a second source of income are holding up quite well. The following article aims to provide individuals looking to invest with some profitable investment options to get them started on their journey to financial freedom.
Corporations aiming to collect funds sometimes issue bonds to investors, and the maturity age of these bonds does not exceed more than five years. Additionally, this investment option offers high liquidity, as fund shares can be easily bought and sold anytime. Short term corporate bond funds are a type of investment preferred by risk-averse investors like retirees who wish to earn a bit more in comparison with government bond funds.
Dividends refer to portions of a firm’s profit that can be paid out to shareholders regularly, usually quarterly. The top benefit of investing in a dividend stock is that you’ll not only get a return on your investment over time, but you’ll also get paid regularly. People looking for long-term investments and continuous flow of income usually consider investing in dividend growth stock funds. However, it is crucial to carry out market research and be careful because stocks are a risky and unpredictable investment.
Real estate investment comes with numerous benefits; for example, you can earn every month by renting out a property. Additionally, real estate appreciates; the more time you hold onto the property, the more capital gain you will earn. However, it is vital to get advice from property inspectors to ensure that you are making a profitable decision. For individuals looking to invest in the UK, some of the best locations to buy property in the UK are Birmingham, Manchester and Liverpool outside of London.
A savings account refers to a basic bank account that allows you to deposit and withdraw money while earning interest. A savings account is for a more unconventional investor, that doesn’t want to take much risk. Opening a savings account does not involve any risk if you choose a trusted bank, making it the ideal investment option for people who don’t like taking financial risks.
A fixed deposit is when you deposit a certain amount of money into a bank for a certain period. Making a fixed deposit means you will not be allowed to withdraw that money until the set time period ends. In return, you will receive a higher interest rate than a regular savings account. The higher the tenure, the higher the interest rate. However, it is crucial to understand that if for some reason you withdraw your money before the period ends, you will have to pay a penalty. When deciding what to invest in, you’ll need to weigh up these restrictions and decide whether the extra return is worth locking away money you might need to access.
A government bond fund refers to a kind of debt security issued by a government to aid government spending. By investing in government bond funds, you will receive a steady stream of interest. Furthermore, this investment option is ideal for low-risk investors, as the government promises a return. Government bond funds are very liquid and easily resellable. However, by keeping the bonds until maturity, you can get maximum return on them.
A mutual fund pools money from investors, and a fund manager then used this pool to invest in stocks, bonds and other assets. Investors do not have to worry about handling anything or deciding where to invest the money. In return for a small amount of commission, the fund’s manager will manage everything for you. Moreover, one can invest in mutual funds once or start a systematic investment plan to transfer a fixed amount to the mutual fund weekly, monthly, or every quarter. There are numerous mutual funds, and some are ideal for short-term investments while others are better suited for long-term investments. Additionally, this investment option can be a low risk investment, you just need to do your research and choose the right funds.
Index funds refer to a form of mutual fund that invests in equities that correspond to a specific market index. Unlike an actively managed mutual fund, which pays a professional to curate a fund’s assets, the goal is to provide investment returns equal to the underlying index’s performance. Index funds is a type of investment preferred by individuals with long-term saving goals and can be considered a low-risk investment.
By purchasing individual stocks, you receive ownership in a company. Stocks offer a high rate of return on investment; however, with one wrong decision, you risk losing all your investment. Due to the increased risk factor, investors who have a high stream of income and are willing to take high risk may be willing to go to this investment option.
ETFs are quite similar to mutual funds, as a fund manager collects many clients’ money to acquire a group of securities, resulting in a single diversified investment. A significant difference between deep value mutual funds and ETFs is that ETFs are purchased in the same way that individual stocks are. Like mutual funds and index funds, cheap equity ETFs are usually preferred by investors looking for long-term investment opportunities.
Investing can help you multiply your money and build a better future over time. There are multiple investment options, ranging from safe assets offering low returns or riskier assets providing higher returns. To make the best decision, one has to keep in mind the pros and cons of each investment option and assess if they have the necessary funds required to invest. Start investing in one of the ten investment ideas mentioned above by choosing the one well suited to your portfolio.