Thursday, 9 January 2020

Best Ways to Invest Money in 2020

Figuring out how to invest money can be a real challenge.
And I’m sure you’ll agree with me when I say:
There’s certainly no shortage of information on investing available in the digital age.
However, too much information can be overwhelming.
Right?

That’s why we made a guide to help you get a solid grasp of investing. It’s the perfect resource for beginners who want to start investing money in order to reach their financial goals.
We structured the information in a way that is comprehensive yet not overly complicated.
Outlined below you will find everything you need to know to start investing and begin preparing yourself financially for the future.

How to Invest Money

When figuring out how to invest money, it’s best to start with the basics. I’m sure any financial advisor will agree with that.
These basics include setting the goal of your investments and determining where to invest money to best achieve each goal.

Investing Money for Beginners

When you invest money, what you are doing is either buying a portion of a company or a commodity with the belief that the value of that company or commodity will grow over time.
Don’t forget:
Investing is not a get-rich-quick scheme, but rather a way to consistently grow the wealth you already have. The good news is that even though investing is a way to grow your wealth, you don’t have to have a lot of money to get started.
Compounding interest dictates that even small sums of money can be turned into fortunes over time, providing you select the right investments.

how to invest moneyWhere Should I Invest Money?

When deciding where you should invest your money, you’ve got plenty of options. These options include:

1. The Stock Market

The most common and arguably most beneficial place for an investor to put their money is into the stock market.
When you buy a stock, you will then own a small portion of the company you bought into.
When the company profits, they may pay you a portion of those profits in dividends based on how many shares of stock you own.
When the value of the company grows over time, so do the price of the shares you own, meaning that you can sell them at a later date for a profit.
Other investment options include:

2. Investment Bonds

When you purchase a bond, you are essentially loaning money to either a company or the government (for US investors, this is typically the US government, though you can buy foreign bonds as well).
The government or company selling you the bond will then pay you interest on the “loan” over the duration of the bond’s lifecycle.
Bonds are typically considered ‘less risky’ than stocks, however, their potential for returns is much lower as well.

3. Mutual Funds

Rather than buying a single stock, mutual funds enable you to buy a basket of stocks in one purchase. The stocks in a mutual fund are typically chosen and managed by a mutual fund manager.
But here’s the kicker:
These mutual fund managers charge a percentage based fee when you invest in their mutual fund.
Most of the time, this fee makes it difficult for investors to beat the market when they invest in mutual funds. Also, most mutual fund investors don’t actually ever beat the stock market.

4. Savings Accounts

By far, the least risky way (and probably the worst way) to invest your money is to put it in a savings account and allow it to collect interest.
However, as is usually the case, low risk means low returns. The risk when putting your money into a savings account is negligible, and typically, there are little to no returns.
Still, savings accounts play a role in investing as they allow you to stockpile a risk-free sum of cash that you can use to purchase other investments or use in emergencies so you don’t touch your other investments.

5. Physical Commodities

Physical commodities are investments that you physically own, such as gold or silver. These physical commodities often serve as a safeguard against hard economic times.

Best Ways to Invest Money in Your 20’s

It’s never too early to start investing. In fact, just a few years of a head start can often lead to hundreds of millions of naira more money by the time you retire.
When you’re investing in your 20s, it’s best to start out by focusing on paying off any debt you may have such as student loans or credit-card debt.
Debt works just the opposite of investments, exponentially decreasing your wealth rather than exponentially growing it, so it’s a good idea to make getting debt-free your first and foremost goal.
Once you have your debt under control, start researching the stock market and investing as much as you can.
Take in as much information as you are able, and start highlighting quality companies that you believe will grow in value over time.

No comments:

Post a Comment

Sharing is Caring