Wise and seasoned investors know very well how to avoid putting all their eggs in one basket. This is one of the fundamental rules of investments, and sadly enough, newbies often overlook it. Professionals, on the other hand, try to familiarize themselves with different types of investments out there.
This is all about risk assessment. Investing all your money in one thing could lead to a dramatic outcome if your investment fails. Professionals will use their education and knowledge to find out how to make money in a few different ways – if something fails, something else may actually work, meaning less risk.
In terms of investments, there are plenty of baskets to choose from. However, it is important to understand how each investment can actually help, not to mention the risk – all these things will help you build a portfolio in a smart manner.
Figuring out the best investment to make money is tricky. Each type has both pluses and minuses. Some of the best options depend on your tolerance to risk. At the same time, you must become familiar with the markets and understand them – plus, keep an eye on the timeline to stay away from capital gains.
As if all these were not enough, you need some good reasons as well – why do you look for an investment in the first place? This article will help you become familiar with the most popular types of investments out there, as well as what they imply.
Does It Pay to Invest in Gold?
Gold is extremely important in today’s economy because its wealth has been successfully preserved overtime. You cannot say the same about currencies, though – they come and go. Even if they stick, their value will be drastically affected.Take a look at the 1970s, when an ounce of gold was around $35. You could buy a high-tech bicycle with $35 back then or perhaps buy a professional suit. If you have an ounce of gold today, you could still buy a bicycle, a suit, or both. But if you kept the $35, you would probably get a meal in a restaurant.
Gold has gained in value, while currencies lose value because of inflation.
Now, whether there is a conflict in the Middle East or you consider the most recent Russian attacks over Ukraine, you will notice that economic and political instability will affect currencies and not only. As things become more expensive, currencies cannot keep up.
Gold is a safe haven. In fact, gold has always gained in value during uncertain times. If the world struggles, gold gains in value. If the world is stable, gold still gains in value. The only difference is the actual speed.
Moreover, while this is not the best reason to own gold, most people see it as an asset to diversify their wealth. Gold has always served as an investment, and its purpose has not changed too much, whether investors are worried about inflation, political conflicts, or having their eggs in the same basket.
When it comes to making an investment, the gold market has diversified lately. A few hundred years ago, your options were quite limited. These days, you have more possibilities – some of them more appealing than others:
Is Cryptocurrency a Good Option?
Digital coins keep coming in the news every now and then. They make headlines all the time. In fact, even Warren Buffett has decided to invest in this field, as one of its companies bought $1 billion worth of stock in a bank that deals with cryptocurrencies.Governments are trying to regulate this field, but it is quite difficult. People are concerned, but also anxious – the same goes for central banks. Take Bitcoin, for example. It went up to $69,000 in November, 2021, only to drop to $34,000 in February, 2022. It is not the first time such changes have occurred.
Now, Bitcoin – and other cryptocurrencies – are extremely volatile, and this is the main risk. There is a risk you are taking – you can go for it, but make sure you understand what it means. The price could go up again in a week, a month, or a year – very hard to anticipate.
There are more mistakes when about to invest in Bitcoin – the fear of missing out is one of them. People want to be in the trend – no one wants to miss out on the next big thing. This would have been an aspect about 10 years ago, when Bitcoin was worthless. Today, not so much…
There are certain things you need to ask yourself before making this investment. Do you understand how the market works? Do you understand why you want to invest? Are you happy with the potential risk? Is there any evidence that suggests prices might go up?
Try to see things from a different direction. The price has gone up compared to 10 years ago. Why are you interested now? Why was this asset irrelevant when the price was cheaper? Why would you buy it when the price is high? You would not do it for other assets.
You need good and detailed answers to all of these questions before making an investment.
Here are a few things to keep in mind before investing in Bitcoin should you decide to go for it. First, avoid investing all your life savings because it may take years to see profits – if you will actually see some profits.
Such investments should be seen like gambling. Invest a small amount of money and only part of your disposable income – be prepared to lose it. If you win anything out of it, it is a bonus. In other words, do not invest more than what you can afford to lose.
If you do not have too much money as leftovers at the end of a month, it is better to avoid such investments for now and focus on saving a little. Like other assets, cryptocurrency should be treated as a long-term investment – yet short-term trading can also bring some profits.
Is Real Estate a Good Investment?
Generally speaking, real estate is a great opportunity. Just like gold, properties keep gaining in price overtime. Sure, prices go up with inflation, but results are much better compared to money savings. Indeed, the market is not always great.There are times when all prices go down – take the financial crisis from 2008. However, if the history teaches us one thing, that is the fact that the economy bounces back even stronger than before. Each crisis makes the market even better in the long run.
Real estate could be the best investment to make money over a long period of time. It also generates passive income. As the value grows overtime, it makes an excellent starting point when starting to build wealth.
However, it requires attention. You must be 100% sure that you are ready to make this investment. First of all, it requires lots of money – a property is not cheap at all, whether you go for a piece of land, a flat, or a house. Second, think about the maintenance too.
If you can pay everything upfront, even better. Professional investors avoid borrowing money to purchase investments. If you can pay everything upfront – even cash, you will start making money right away. If you need a mortgage, make sure you can actually afford it, even if you are not renting the property out.
Try to see it this way – renting the property out will give you a decent income. But then, there will be times when the property will be on the market without anyone renting it. Can you afford the mortgage in such a situation? If not, this investment becomes a financial burden, so it is less likely to help you gain wealth.
When getting involved with real estate, you must plan out each of your expenses. You must double-check the potential taxes coming with the property, as well as repairs, upkeep, maintenance, and utilities. Sometimes, it pays off paying someone a particular percentage and let them deal with everything.
For instance, rental companies act like managers and can handle the repairs, find tenants or collect rent. Indeed, you need to pay for such a service, but it takes away all the stress and pressure, especially if your time and experience are limited.
The price of your property must cover each of these expenses. Take the first months of income and put the money aside, as you will most likely need repairs later on. The insurance is also to be considered, not to mention potential situations that may arise later on.
Finally, it pays off starting small. Get a house or a duplex apartment – live in one unit and rent the other one. It is a cheap starting point, but you will live in the same building with the tenant. On the other hand, real estate wholesaling could also be a good starting opportunity.
Why Invest in Diamonds?
Diamonds could be the best investment to make money, especially during times of uncertainty. Reasons to invest in diamonds are quite diversified, and the good news is that they make perfect sense, so there is not too much education required.First of all, they do not take up too much room. The fact that such tiny things can be worth a fortune makes them incredibly good. You can get a diamond worth a million dollars in a tiny safe that no one will ever find. How convenient is that?
Then, diamonds are durable and will not wear out. This is the hardest substance on this planet. You are less likely to destroy it if you fail to look after it. There is one thing you need to be careful about – make sure you do not lose it.
Many physical commodities are less likely to be affected by inflation, and diamonds make no exception either. They are also easy to move and more durable. Even if you are not necessarily looking for an investment, a diamond is a way to save money or keep money aside without worrying about inflation.
Another good thing is that you can actually wear and enjoy a diamond while owning it – obviously, you have to be careful about it. No one will care about second hand diamonds because there are no signs of wear and tear – simply enjoy it while you have it.
Now, how do you invest in diamonds? Make sure you understand the basics and get some knowledge of this industry. Set a budget – this is part of your portfolio. If your budget is $50,000, avoid buying a single diamond worth this kind of money – buy four cheaper diamonds and make sure they are different.
Diversifying assets is important in both money and other valuables.
Diamonds are not stocks, so prices are not set by buyers and sellers. But with so many options out there, you should still compare prices. Buy rare, yet desired diamonds if you can – perfect sense. Know what you are getting too – opt for certified diamonds only. Perhaps get an expert to help you out.
Finally, for diamonds to be the best investment to make money, you need to buy them cheap. Avoid buying from retailers – this means every intermediary will get its share. Skip all these middlemen and stick to diamond manufacturers.
How to Invest in Art
Art is a long-term investment, and profits will not kick in overnight. You need to be patient and give art more than a decade to bring in some profits. The value will not be affected by the stock market. Art follows its own rules, but normally, it tends to appreciate overtime.On the same note, art can also be risky – ups and downs like other markets.
Decide how much money you are ready to invest first. Consider maintenance, too, as well as storage – certain types of art may require particular storage conditions. Learn about art – visit galleries, chat with curators, join discussion boards, and so on.
Browse – and even attend – auctions dealing with art if you can. Even if you are not buying anything, you need to get a sense of this industry and how it works. Once you decide on a particular artist or type of art, you can narrow down your options and find out more about your interest as an investment.
Now, investments can go in two directions – you can purchase the actual art, or you can buy shares in artwork. There are certain marketplaces that allow such types of investments. Lots of art sell online, so there is plenty of material to study and learn more.
It is worth mentioning that art is not liquid. It cannot be converted into cash overnight. Liquid assets will provide money much faster. Other assets take longer to convert. From this point of view, you should see art like real estate – profitable, but less likely to sell straight away.
Liqueurs and Their Potential as Investments
Liqueurs – and especially whiskey – have always generated great returns. History will always give you some good answers when evaluating the best investment to make money. While there are more reasons to invest in whiskey, one of them stands out – good returns in the long run.Such a tangible asset will boost excellent levels of growth, regardless of the economy.
Whiskey casks will also gain value as the liqueur matures. This is one of the most attractive aspects of your investment. The liquid will keep maturing. Sure, property and metals may also gain in value overtime, but whiskey has an actual reason behind it.
While this is not always a general rule, whiskey can double in value for every five years of maturation.
Then, whiskey is tangible. Tangible assets have intrinsic values, and whiskey is one of the top choices. Compared to other assets – such as bonds, mutual funds, or stocks, a tangible asset offers full control and ownership, rather than paperwork only.
Based on the country where you choose to invest, rules may vary widely. For example, you could have casks titled in your name, but also held in governmental facilities. You might as well visit these facilities and take a look at your holdings.
Whiskey poses less risk than other investments because its provenance cannot be faked. Take Scotland, for example – a great location for such investments. Each cask of whiskey is held in governmental warehouses and tracked from the distillery.
This way, if a bottle carries the Scotch whiskey label, you can be 100% sure that it is authentic and has its origins verified – and Scotland has some strict rules when it comes to liqueurs. Other tangible assets are often plagued by fakes, so extra care is required.
In terms of liquidity, whiskey sells quite quickly. There are always potential investors or active buyers around. Liqueurs, in general sell extremely quickly on the secondary market, regardless of how the economy is doing.
It is important to know that whiskey is one of the few solid investments that can be consumed. Millions of casks are emptied by consumers from all over the world. The dynamic is incredible and contributes to the success of this industry.
Do you need other reasons to invest in whiskey and other similar liqueurs?
- Limited supply
- Surging demand
Other Profitable Ideas for Potential Investments
There are no doubts about it – to enjoy a more comfortable future in terms of finances, investments are mandatory for most people. Take a look at the latest crises – the one from 2008, the pandemic, or even the war between Russia and Ukraine.An apparently stable economy can be turned around in no time, hence the necessity to be prepared.
Here are a few interesting investments that might be worth some attention:
- High yield savings accounts – this is basically a classic savings account, but it requires some research. You need to find a bank account providing great interest rates. As a general rule of thumb, online banks seem to be better for such investments.
- Certificates of deposit – issued by banks, such certificates will provide exquisite interest rates and can beat most savings accounts. Deposits often come with maturity dates, which usually expand over years, rather than months. Plan your investment very carefully.
- Government bond funds – such investments are more common in the USA. They basically represent ETFs or mutual funds investing in debt securities. The investment is excellent for newbies.
- Mutual funds – investment funds are operated by money managers who aim to make profits on your behalf. Such things are managed by experts who are less likely to always beat the market, so they require a bit of caution.
Worst Types of Investments for Beginners
It makes perfect sense to know what types of investments to avoid too. A good rule of thumb implies considering the reason of your investment. Why are you putting money into something? If you want to boost your ego, this is a bad investment that will only put you in debt.Such investments include cars, house decoration, and other things that will lose value with every second. Sure, you will make an impression in the area, but the benefits are temporary. You need to live within your possibilities and actually plan your money expenses.
None of these things is an investment – instead, these are money traps. Saving cash is also a bad idea. Like boats or cars, money in an account will lose value in the long run – this is how inflation works. You need to spend it on things that bring value.
Conclusion
Bottom line, deciding on the best investment to make money is difficult. There are lots of opportunities out there – some of them better than others. It depends on where you live, things you are passionate about and might find an interest in. Your current circumstances are just as important.What works for some people will not work for everyone else – learn from others, but avoid following strategies step by step because they will not always work. Instead, you need to assess your needs and situation first.
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