When it comes to best ways to invest money, you will never want to risk your hard-earned money on an option like stock market. In fact, no one will! If you are serious about moneymaking or wanting to double on what you have invested in, you have to play your cards right. Now, to make sure that you are investing your capital on the right place, we are listing you 6 great options to choose from. Read on.
How To Invest Your Money Smartly?
We will start this list with 2 beautiful quotes –
Money doesn’t grow on trees
A penny saved is a penny earned
The reason why we wanted to write those proverbs is that, you might have heard them like a million times but the question is how serious are you about it? In the current era, it is not that easy to earn money, as it seems. If you are earning it, make sure to manage it properly. Once you have started managing your finances effectively, there is no doubt that you would have saved enough to make an investment. It doesn’t matter whether it is small or big, but as long as you are investing it on the right plan, money-growth is guaranteed. Now, a very perplexing question is – where to invest your money or what is the best investment option today? Here are 6 great alternatives to never neglect:
1. Precious Metals (Platinum, Gold, Silver)
- Annual Return on Investment: 25.6 to 34.4%
- Safety: 95%
Precious metals, especially gold is still a controversial asset. In fact, gold has been a universal symbol of wealth since ages. Even though thousands of years have passed, the attraction for gold remains as strong as ever. Though gold is one of the best investment options, it isn’t the only metal to drop your money on. The 3 other major options include silver, platinum and palladium. The demand as well as the price of all these metals has drastically improved in the recent years. While many people relate precious metals with coins and jewelry, there are many other uses, which you might not be aware of. Say for instance, gold is very widely used in technical industry. It plays a key role while making components. On the other hand, platinum is used in making automotive parts, medical equipments etc… Softer than platinum is palladium, which is a vital element in catalytic converters. So, the demand for these precious metals is never going to end. The best thing is that you can convert them into money at any time. Hence, investing on genuine metals is a smart way to save for your rainy days, especially during inflation.
You can buy these metals in the form of:
ETFs (Exchange Traded Funds) that hold bullions:
- PPLT (Platinum)
- GLD (Gold SPDR)
- SLV (Silver)
- PALL (Palladium)
2. Real Estate
- Annual Return on Investment: 11.8 to 16.5%
- Safety: 98%
One of the safest and best ways to invest your money is none other than on “Real Estate”. This investment topic is worthy of its own piece of writing but we will just summarize some important points here. Many characteristics of real estate make it an attractive investment, which are:
- As the name clearly explains, “Real Estate” is like a “Real Asset”. A physical commodity has value in itself.
- It produces income by capital appreciation, rents, or both.
- Whether it is a housing business, manufacturing plant or a warehouse, land is required.
- The real estate market is certainly going to grow in the upcoming years. So, if buy a good land today, you are sure to secure for a better future.
Whether a property will make a good profit in the future or not comes down to 6 things:
- Where you buy the property?
- How much you buy?
- For what price you buy?
- Are there proper facilities surrounding the land?
- Is it really worth investing so much on that land?
- Will the property’s price tend to grow in the future years?
You can invest in real estate in different ways. Some options are:
Buying Property Direct: Purchase a good property to generate capital appreciation, rent on a monthly basis, rehabilitate, put on an eventual sale or flip for an instant profit.
Real Estate Partnerships: The money you invest as a real estate partnerships is further used for building shopping centers, apartments, commercial building and so on. Here you are a limited partner. Hence, you cannot lose more than what you have invested. You should have seen many people doing this kind of investments these days. The reason is that it offers tax advantages.
Real Estate Investment Trusts (REIT): These are more like real estate mutual funds, where the money gathered is used in real estate mortgages or real estate itself. In this type of investment option, you can buy shares and collect your income in the form of capital appreciation or dividends. This could be the best investment option, especially if you are not willing to risk your money.
3. Fine Wine
- Annual Return on Investment: 12.5 – 14%
- Safety: 88%
Wine? That too as an investment? We bet, you might not have thought of this one right? Wine is one among the few consumable commodities, whose value increases with age. But you need to have a deep understanding on wine and you will also need a well-controlled temperature room to stock them in. Most wine collectors turn out to be investors only by accident. You will be interested in knowing the fact that when their cellars become crowded, they sell few bottles and this is exactly when they reap substantial and surprising gains. However, as the cost of fine wine has increased dramatically in the recent years, many new wine buyers groups have started obtaining cases of 1st growth Bordeaux as their investments. Moreover, even the Wall Street types are investing their money into something known as “wine funds”—similar to mutual funds.
Whether you will be able to reap good profits from this investment or not, comes down to 3 different things, which are:
- How much quantity of wine you have stored?
- Are you maintaining accurate records?
- What type of wine you have?
- From where have you purchased?
Wine connoisseurs need all the above-mentioned information prior purchasing wine from you.
4. A Silent Partner In A Growing Business
- Annual Return on Investment: 8%
- Safety: 75%
We are talking about the small businesses here. Starting your own business can be a real risk. It could be worse if you are planning the business to be your ultimate investment. However, a good alternative is to make a bona fide investment in any existing business. Small business owners these days find it hard to get financing from bank. As an investor, you can give the capital to businesses that need money to expand and grow successfully. In short, you can become a firm’s silent partner, entitling you to a specific percentage ownership from the business and its revenue stream. Whether you will get good profits or not, comes down to 4 important factors:
- How much capital you are investing?
- How much share you get as an investor?
- What kind of business are you investing your money in?
- What is the future growth of that business?
5. P2P Lending
- Annual Return on Investment: 5 to 7%
- Safety: 89%
One of the best ways to invest your money is none other than on P2P. This type of investment not only benefits you, as an investor but also a borrower. P2P or peer-to-peer lending was initiated in the mid 2000, a time when several borrowers were frustrated with financial institutions’ dominance of their loan process. Unlike those conventional lending practices, peer-to-peer gives bigger returns for investors and lowest interest rates for borrowers. Banks are never involved here. This literally means that there are high returns and low interest charges. Thus, assisting both the parties. You will be surprised in reading the fact that a P2P lending firm named “LendingClub”, started in the year 2007 and made loans worth $3.5 million in the very first year.
One of the best things about P2P is that it offers diversification on the loan portfolio you are investing in. Say for instance, if you invest $15,000 via LendingClub, the loans might spread out over hundreds of individual loans. Now, with this type of diversification, even if 1 or 2 go unpleasant, your portfolio will not be clobbered. Also, the interest you are getting is big enough to pay the damages. You can invest in any good P2P lending firm like LendingClub with just $50. But, make a note that this peer-to-peer will not be available in all states.
6. Certificate Of Deposits
- Annual Return on Investment: 4.5 to 6%
- Safety: 92%
Hope you know that the returns on money market funds are microscopic these days. However, you can use CDs (Certificates of Deposits) to perk up the returns. By building a nice CD ladder, you can successfully create your own money market fund. Of course, you won’t turn rich by doing this, however you can improve the overall returns of your portfolio. And the most important thing – CDs are 100% safe, as they are insured by FDIC and held by banks.