Investing as you earn is one of the best ways to improve your financial situation. Investing over time can help build a passive income, create amazing retirement savings, or help you buy large purchases such as houses or cars. Investing in various ways is far easier and more achievable today than ever before in history due to modern technology and online sales.
Starting out in investing can seem daunting. It can be rather hard to know exactly what to invest in, when, and for how long. In this article, we are going to discuss 8 things that you can invest in to build a better financial situation and future for yourself. Let’s talk investments…
Surprisingly, investing in art has become far more achievable these days. Again, due to modern technology and sales methods, you can now invest in shares of art rather than the more traditional route of buying art pieces themselves. Platforms such as Masterworks.io divide pieces of art up into shares, allowing investors to buy a percentage of each piece. Once there are enough investors involved, the piece of art as a whole will go up for sale – hopefully for a profit! This is a fun and exciting way to get involved in the world of art investments. Over time, you can up your share amounts and invest in more famous pieces, leading to bigger gains each time.
We’ve all heard of stocks and shares. Nowadays, you can buy, sell, and trade shares online free of charge! It has literally never been easier to invest. Knowing what to invest in is anybody’s guess, though! It is best to spend some time researching companies that you are interested in that you think are going to grow over time. When the first iPhone was launched, Apple shares were worth just under $5. Today they sit at over $125. Meaning if you had purchased 100 apple shares for $500 in 2007, you’d now be sat on $12,600 worth of shares – $12,100 profit!
3. Dividend Stocks
Some companies pay their shareholders dividends. Dividends are a share of profits between all shareholders. If we stick with Apple, a popular dividend stock, we can see that they currently (Apr 21) pay 22 cents per share. So, again, if you had 100 shares, you’d be receiving around $22 per quarter in dividends. This doesn’t seem like much, but if you have a portfolio full of dividend shares paying you quarterly, you can work your way up to making dividends pay you a decent income.
4. Managed Funds
For those of us who don’t have the time to study stock markets and dividend prices, there are managed funds that can do a lot of the work for you. Many investment apps, platforms, and companies have their own diversified funds made up of a selection of shares. These are chosen by professional traders, meaning you don’t have to do any work other than pay to invest. A well-managed investment fund could return between 5-8% profit in interest per year, which is reinvested into the fund creating compound interest – each year you are earning interest on your interest.
A slightly newer type of trading– cryptocurrency. Bitcoin launched in 2009, in an effort to create a technological alternative, open-sourced, transparent way of paying for things online. Like gold, it has a finite amount and more is ‘mined’ by technology every day. This simple supply and demand chain means bitcoin increases in value over time.
Not without its hitches and crashes, mind. In 2017 it crashed over 80% and scared many investors away from the crypto field. However, since then its stratospheric rise has brought more and more investors into the cryptocurrency sphere. Now, like other shares, you can buy bitcoin, along with many other cryptocurrencies through apps and websites, making it super easy to get involved in this new way of investing.
6. Pensions (401k)
In a recent survey, it was discovered that only a very small percentage of Americans had started saving for retirement. This is quite scary, as reaching retirement age with no savings could mean a very low quality of life in old age. Retirement funds can be invested in a variety of ways and all you’ll need to do is invest a small per cent of your salary each month to start building up your funds.
The most common plan is the 401k. In a 401k plan, your money is taken from your paycheck pre-tax and invested into a variety of funds like stocks, bonds and cash. These are offered by employers, as they often match your contributions to top up your investment. This is basically free money twice – you’re paying less tax now, while your employer pays future you some extra money!
7. Roth IRA
An alternative to traditional 401k savings is a Roth IRA. With a Roth IRA, you will pay tax on the contributions you make now, meaning you won’t have to pay them in the future. This is particularly smart if you are saving very high sums of money, as the last thing you want in retirement is to have a huge chunk of tax taken from your savings. You can pay it now, potentially at a lower rate, and save yourself the hassle at retirement age.
8. Emergency Fund Savings
Though this is not an investment as such, it’s a top piece of advice from most experts in the financial field. An emergency fund is 3-6 months’ worth of outgoings placed in a traditional savings account. This is to better your financial situation in the case of any emergencies. The last thing you need if you lose a job or your house needs repairs is to be taking on debt. So, you should always have enough money to cover 3-6 months outgoings stashed away in an online savings account, easy to access when needed.
These eight things will help you build a better financial future and keep your current financial situation well-managed. Many investors lose money, so make sure you do your research before throwing money at any stocks or shares. Diversify your savings through all the above methods for extra security.