Generally, if you want to make the most of your cash over time, the worst thing you can do is simply leave it in your current account. You might even struggle to earn any rewards with a savings account, as interest rates on these products aren’t always as beneficial as they seem. While the concept of investing can intimidate a lot of people, it’s often the best way to improve your assets over time and set yourself up for long-term financial success.
The good news for those who feel concerned about buying assets is it’s rarely as complex as it seems. All you really need to do is determine your risk level and start diversifying your portfolio a little bit at a time. You can also always consult a professional to help you make sense of it all before you make any real moves. To help you get your head around the idea of investing, let’s take a look at some of the most common options for growing your money.
Stocks, Equities, or Shares
Probably the most-known form of investment on the market today, stocks are simply percentages or positions in businesses or organizations you buy. When you purchase a share, you’re buying an ownership stake in a company which has been listed for public trading. Plenty of massive companies fall into this category, including Apple and Facebook.
There are many ways to buy stocks. You might consider investing in penny stocks, one of the more affordable options, but more volatile aspects of the trading environment. With penny stocks, you’re buying largely unregulated equities, which means you’re taking on more risk. However, you can use guides on the best penny stocks to trade to help you determine the right list of stocks to monitor and reduce your risk.
Mutual Funds
Otherwise known as a kind of pool of investor money invested broadly across a range of companies, mutual funds can be an either active or passive solution for growing your cash. With an active investment, a fund manager picks securities where your money is placed. This can make it easier to get quick results.
On the other hand, you can use a passive strategy to simply use investments based on stock market indexes. Though they carry many of the risks of bonds and stocks, mutual funds can sometimes be seen as a more comfortable entry point for beginners because of the diversification you get from day one. You make money on the value of the bonds and stocks increasing over time.
Bonds
Bonds can seem a lot more difficult to understand than stocks and shares, but they’re actually not as complicated as they seem. When you purchase a bond, you essentially lend cash to another entity. This is usually a government, or business entity. Companies issue corporate bonds, but it’s also possible for governments to issue bonds defined as municipal.
There are also treasury bills and bonds to access from the US treasury. Ultimately, the way you make money with this kind of investment is similar to how banks make money off loans. When lending money, you get interest payments. After the bond matures, you’ll get your full principal investment back too.
