Hello Readers,
In one of my recent posts, I talked about how to start budgeting and saving with any earnings and really glad to see that you liked reading it and also gave me feedback on my post. So today, I have come again with a similar type of topic where I will be talking about different sectors where you can start saving your money in order to let it grow over time and venerate wealth or a passive source of income for you. But before going into the details, the first question that may arise in some of your minds about the need investment and why anyone should not enjoy their hard-earned money. I would say that each of our lives is full of uncertainties and danger rarely gives any warning before striking anyone's life. In today’s world, money is power and power is money and those who know how to make money work for them will only be the ones who will taste a better life whereas the others will work their entire life and still be unhappy with their financial condition. Investing is a weapon and an excellent way to grow your money over a span of time, but if you are new or a beginner in the world of investment, it is important first to know and learn about the different investment strategies available in today’s world. Now without further ado, Let us take a closer look at different investment options and their pros and cons in simple language below.
Savings Accounts / Certificates of Deposit (CDs)
Most of you are already aware of savings accounts or CDs and for those who don't, these are considered the safest, form of investment with low risk and low growth upon your invested capital and are generally offered by banks. You just have to open a savings account in any bank and start depositing the money you want to save from time to time. There’s no limit on how much minimum you can deposit but in many cases, there are some restrictions on how much or how frequently you can withdraw your money from there and needless to say that withdrawing money from your savings account also affects your growth. Currently in my country savings accounts in banks provide around 4 a 7 % interest per year which is a good return considering that you don't have to take any risk on your investment. Having a savings account helps us by providing security and easy access to your money and CDs generally offer slightly higher interest rates than savings accounts. However, the returns in this sector are typically low to medium and may not beat the inflation.
Stock Market Investing
Every country’s economy is built upon the companies and financial institutions that generate value and also help to develop the country while empowering people by providing jobs. When a company grows into a giant and gets a huge valuation, usually it goes public and launches its share in the market. Then the people can buy shares of those companies and if the company perform well, its share price also increases those who hold those share can sell to book profit or sometimes get dividends for holding shares. The average return on this share tends to beat the return you get from Savings accounts but it also comes with risk as not all company rises over time and some falls down too. But overall, investing in shares has a potential for higher returns and those who hold shares of a company get a portion of the ownership in that company as well. But please note that stockss can be volatile and buying the right ones at the right time and later selling them at the right time to book profits, can be challenging for beginners, so please do your own research before investing in the share market.
Bond Investments
This sector is similar to the Share investment that I just talked about above but the only difference here is that you are not investing in any company but rather lending money to governments or corporations to run or develop certain things and in return your investment may be appropriated over time. bonds are usually less risky than putting money in shares or other investment areas and also offer regular interest payments to the investors. However, in Bonds, the Returns are generally lower and bond values can be affected by interest rate changes controlled by central banks or govt.
Mutual Funds
Investing money in the share market can be risky, especially for those who don't hold much knowledge about it and most of the time investors end up losing money and start cursing the share market. However, to solve this problem the mutual fund scheme rise globally where financial advisers and fund managers help investors to strategically invest their money in the share market and get them good returns in return for a small percentage of charge. These Funds are generally very big in size and act as a pool of money that uses a large amount of money from multiple investors to buy, maintain and sell a diversified portfolio. Here, good mutual funds may give a 10-15% average return on investment per year but its dynamic and market volatility can bring loss in your investment just like the share market. There are 2 ways to invest money in mutual funds - SIP (systematic investment plan where users out money every month) and lump-sum (one-time investment). The main advantages of investing money in Mutual funds are asset Diversification to reduce risk, professional management to use funds professionally and strategically and good liquidity means investors can withdraw money within 2 or 2 days generally. However, Some funds have more fees that can impact returns and performance also varies and depends on market sentiment.
Real Estate Investment
One of the best businesses in the world to generate wealth is real estate Investment and it is another way to get appreciated well over a long period of time upon your invested principle. Investing in properties can generate rental income or potential appreciation in the short and long term. One of the best advantages of investing in real estate is getting Rental income from your asset while in the meantime the property appreciation will potentially increase as well. However, it will require a large amount of upfront capital along with ongoing maintenance to protect the asset.