Investing is a wise way to make your money grow. The return for your investments could go a hundredfold if you play it well. Instead of putting your money in a local bank, investing in stocks, bonds, currency, or gold will allow you to beat inflation.
Which of these options will let you get a better return? This article will enlighten you on these choices to help you decide where to put your money.
Stocks are a highly volatile investment. They are dependent on market outlook and the state of the economy, so their values can easily fluctuate.
Some people do get rich because of the stock market, but 90% of those who invest in this trade lose their money. If you are new to investing, trading in the stock market is not a good place to start.
You need to build adequate knowledge so that you will be able to choose high-earning stock while avoiding risky ones. Technical analysis and fundamental analysis are skills you have to master first if you would like to try your luck in stock market trading.
This investment involves buying the currency of other countries, typically through Forex trading. Some of the best currencies to invest in are the US Dollar, European Euro, British Pound, Japanese Yen, and Swiss Franc, Australian/New Zealand Dollar, and the Canadian Dollar.
Trading in these foreign currencies might look appealing since you will be transacting in an international platform; however, the mechanism of doing so is more complex than dealing with local stocks. Many fail because they are overcapitalized, and they let greed dictate their trading decisions. Like trading in the stock market, investing in Forex is not for those who do not know how to manage risks.
Investing in bonds is a good place to start for beginners. Their rates tend to be stable over time, so you can have a steady stream of growing money.
However, the problem with investing with bonds is that most rates are only around 2-3% per annum. Thus, it is a low-risk and low-reward investment. Another catch to this is that your money will be inaccessible for five years.
Nonetheless, investing in bonds is still better than putting them in the bank if you are planning not to touch your money for a long time.
Investing in gold is one of the best ways to diversify your portfolio. Ever since 800 BC, gold has been a highly sought after metal. Even today, it is still considered a precious commodity.
Its value has remained stable even through the midst of many geopolitical uncertainties. Owning a couple of it is enough to offset the loss you might have when the economy is volatile.
Gold is considered a valuable hedge against inflation because its value increases even more when the cost of living increases.
For instance, when the Great Depression occurred, the amount of gold skyrocketed despite economic instability.
Of these four investment options, stocks and currency exchanges are the least ideal for beginners. On the other hand, holding bonds offer a low risk yet a small amount of returns and liquidity.
It appears that buying gold is where you can put your money in if you are just new in investing. The demand for this precious metal does not show any sign of slowing down, so it can be guaranteed that you will eventually get a high return for your investment.