Many of us are just focused on getting by, especially these days, when it seems like money is especially tight. But now and again, you might find that you have some extra money. Indeed, you may already have a pot of money that you’ve saved up over the years. Or you might have received an inheritance, or a bonus from work. Whatever the circumstances, you’re in a lucky position if you have some money to play with, and that’s for one simple reason — it’ll allow you to make even more money. Put your money to work, and you might just find that your financial future looks very rosy indeed.
The question is: where should you invest your money? In this post, we’ll run through some of the most effective places to invest your money, as well as some places that are best avoided.
First up: yourself! It’s amazing how often people overlook the fact that they can invest in themselves. And not only can they, but they should. Let’s say you have $5000. You can leave it sitting in a savings account, or you can use the money to send yourself on a course that’ll allow you to earn more money in your career. If you take a course that makes you eligible for jobs that pay $10,000 a year more than you currently earn, then that’s a no-brainer.
The Stock Market
Even a small amount of money can turn into long-term wealth thanks to the stock market. It’s not entirely risk-free, but the truth is that the stock market has performed well over the past few decades, and there’s no reason to think that won’t carry on into the future. You can invest in specific companies, or you can invest in an index fund. This approach won’t get you rich overnight, and indeed it may never get you rich, but it’s generally considered to be a move. Putting $1000 in the S&P Index Fund would be a steady and reliable way to grow your money, without doing anything at all.
Take a look at the investments of wealthy people, and you’ll nearly always see that a lot of their portfolio is tied up in real estate. It’s a pretty reliable way to earn a passive income, after all. Plus, it can provide a big cash windfall when you eventually decide to sell. Of course, that’ll only happen if you have the cash to invest in a property, which many people don’t. But there are other ways to invest in real estate, too. Understanding real estate syndication takes a bit of reading, but that’s all, and once you’ve got the basics of it, you may be in a position to invest in real estate via this method. Remember that you can lose real estate investments too, but in general, they’re considered a good investment.
Online Savings Accounts
Not all investments are for the long term. If you’re looking to put your money on a short-term basis, say for a couple of years, then it’s best to look at a high-yield online savings account. That’ll put your money to work, while also ensuring that you can access your money when needed. These investments are considered completely self, since their FDIC insured.
Where You Shouldn’t Invest
OK, so now we’ve figured out where you should invest your money, what about the places where you shouldn’t invest your cash? That is a longer list than the recommended places. The truth is that you shouldn’t invest your money in most places.
In general, it’s best to avoid anything that offers high returns, or anything that’s overly volatile. Any of these types of investments can be viewed as essentially gambling. If you wanted to earn crypto online and put $1000 into cryptocurrency, for example, then you’d have to be OK with the possibility that you’d lose that money. There’s no such thing as a guaranteed return on investment, but in some cases, it’s much more likely to result in loss.
The Bottom Line: Be Patient
The key to investing your money wisely is to be patient. As we just mentioned above, investments that offer a significant return quickly don’t exist. The way to build your wealth is to take the long view. If you’re 30 years of age, then even investing a small amount of money in the stock market could bring huge returns, but only several decades down the line. In general, it’s best to invest your money smartly and then effectively forget about it.