There are different types of investments and investment styles to choose from. Each investment type has its own set of features and risk factors. It is therefore important to choose an investment that will suit your investor profile, help you achieve your financial goals and provide better returns.
Here are the different places to invest your cash.
1. The Stock Market
The stock market, also known as the equity market, is a collection of exchanges and markets where the trading of equities and other securities takes place. Investing in the stock market is a great investment option as it gives you a stake (partial ownership) in a company.
As a shareholder, you get to receive dividends and profits that the company declares. You also have claims on the company’s assets in case of liquidation.
2. Bonds
A bond is a loan that you give to the government or an organization for interest payments paid regularly for a specified term. The total face value of the bond is paid at the bond’s maturity date.
The value of a bond can rise and fall depending on several factors including the direction of interest rates.
3. Investment Funds
Funds pool money from several investors and invest it based on a particular investment strategy. There are different types of investment funds including:
Mutual funds – is a pooled investment vehicle that allows you to invest in bonds, stocks, market-related indexes and other investment opportunities. The fund is managed by an investment manager.
This type of fund is valued at the end of the trading day and transactions are executed after the market closes.
Exchange-Traded Funds (ETF) – ETFs are similar to mutual funds, except that the securities in ETFs are traded while the markets are open. These funds are cheaper and have a better return than mutual funds.
4. Bank Products
Banks provide a variety of products that you can invest your money in. These include money markets and certificates of deposit (CDs) among others. Money markets are low-risk investment vehicles that give you the safety, convenience, and liquidity of a savings account plus a higher interest rate. Certificates of deposit allow you to deposit money for a period of time in exchange for a guaranteed return on your deposit amount.
5. Real Estate
Real estate is a popular investment vehicle as it offers lots of opportunities for making big gains.
There are different ways to invest in real estate including buying and renting property, flipping houses, renting out rooms, crowdfunding a property and Real Estate Investment Trusts (REIT).
6. Peer-to-Peer Lending
Another place to invest some of your excess cash is in peer-to-peer lending platforms. With these platforms, you’re able to lend your money to potential borrowers who pay it back with interest – usually 6% or more.
Peer-to-peer lending is a short-term investment and a great alternative to most investment options. It’s easy to sign up with the platforms and you get a higher rate of return for both safer and riskier loans.
Investing successfully is key to achieving your long-term goals. The ability to invest successfully, however, depends on a combination of several factors including tools available, time, knowledge and the quality of advice received. There are a variety of investment firms that can help you invest your money successfully. Companies such as Money farm use a combination of innovative technology and investment skills to create and manage your portfolio.
