Choosing to invest your money in areas that bring in more money rather than just saving it is a smart idea.
Investing can now be done by anyone, no longer is it an activity exclusive to the wealthy.
You might get told to invest in this or that, but you don’t know where to start. The art of investing is confusing, especially because talking about money can be taboo at times.
However, if you want to create a bright future, investing is a great step in your journey.
So, here are some basic ways that you can invest your money that aren’t too complex or confusing.
1. A Retirement Plan
The earlier you can start planning for your retirement, the better. It helps you have a set plan when it comes time and also your investment will compound and increase over time.
The best way to plan it out relies entirely on your age and where you are in your life. The longer you have from now until you are planning to retire, the more freedom you can have with your investment portfolio.
Take time to list out a general idea of what you hope for when you retire and build a strategic plan around it. Make sure to refer back to it often and keep those factors in mind.
Where you invest your money for retirement can look a little different for each person. You can also invest it into more than one type of retirement plan.
If your employer offers a retirement account like a 401(k) be sure to take advantage of it.
This plan is great since your money grows tax-free up until you begin withdrawing it once you retire. It also has high contribution limits compared to IRAs.
You can also invest in a tax-advantaged retirement account of your own, which is better known as an IRA.
There are also ways you can limit the amount of taxes on the money you put in or the money you withdraw based on whether you go with a traditional or Roth option.
- Traditional: you decide how much you want going in and it gets taken out of your paycheck by your employer and put into your account
- Roth: you pay taxes on your contributions but not when you withdraw
Regular Investment Account
Your final option would be to put your money into a regular investment account although they do not have tax advantages.
A regular investment account would more likely be used when you put the max amount of money you’re allowed into your other plans but still want to save even more.
First, you have to decide how you would like to invest in stocks—whether you want to do it yourself or have someone else do it for you.
On Your Own
If you do it yourself, you’ll need to create a brokerage account.
You can open an individual retirement account (IRA) or a taxable brokerage account if you’re saving for retirement somewhere else.
If you want to know more about opening a brokerage account, you should check out this site.
However, before going any further in investing, it’s important to note that there are two investment types within stock investments.
1. Mutual funds
One option is stock mutual funds. Essentially, it’s a stockpile of funds from different investors that invests in a variety of assets. It creates diverse opportunities that can help with the highs and lows of the market.
These are a great option for beginners especially.
2. Individual funds
The other option is to invest in individual stocks of a specific company. However, this can be a risky choice.
Done For You
Meanwhile, if you don’t want to do the investing yourself, you can use a Robo-advisor. A program that invests your money for you based on what you are looking to achieve.
You get to invest in stocks without having to pick and monitor them yourself.
Not only does this option save time, but it can also save money. The management fees are generally much lower than what a financial manager would charge.
3. Property/Real Estate
While investing in property can have significant benefits and returns, it can also be hard work.
Regardless of whether you want to flip a house to sell it or rent it out, it requires time and effort. If you’re someone who’s constantly busy, this likely isn’t the best option for you.
However, just like with stocks, you are able to passively invest.
You could invest in a Real Estate Investment Trust (REIT). It uses money from investors to purchase/manage/sell properties like commercial buildings to produce a profit.
This is just one of many possibilities to passively invest, but you can read all about it here.
4. Lending Money
You may be wondering how lending your money out to someone else can bring money more in for you.
Well, the idea is that you take the money you have saved up and let others borrow it—a family member, friend, or business—and establish a plan for them to pay it back with interest.
Some lending options include:
- purchase bonds
- direct loans
- peer-to-peer loans
Whichever way you choose to do it, make sure you have a written contract and that everyone is on the same page for the terms.
The last thing you want to do is lend out money and then never receive it back.
5. Investment Apps
If you’re currently reading this, you likely enjoy using technology and the internet to some degree.
Well, what better way to utilize it than to invest your money through an app. They are similar to Robo-advisors but in a convenient app format, which makes it even easier to do.
You don’t have to deal with the hassle of using a financial adviser or a trustworthy site. Plus, they allow you to invest much smaller sums than if you invest traditionally.
If you want even more leverage for your online trading, consider CFD trading, which allows you to focus on smaller price movements and take a position without ownership.
Some investment apps to look into:
Let’s face it if you are not at all familiar with money, the journey to invest will seem like a wild ride. We get it, we’re right there with you.
But if it’s something you are interested in, the time it will take to do the research will be well worth it.
Additional articles you might be interested in:
- 5 Easy Ways To Make More Money
- How To Find Alternative Lending For Your Business
- 5 Strategies Used By Successful Women Entrepreneurs To Save For Retirement
- How The Internet Can Save Your Business Money
- How To Approach Investing In Real Estate
Katelyn Beery is a blogging intern at LadyBossBlogger.com. She majors in writing at Ithaca College and hopes to pursue a career in either technical or professional writing. She can usually be found cleaning, listening to music, or gazing at clouds.