It can be challenging to choose how to best invest your money. With so many kinds of investment out there, it’s important to research and assess the different options available. Here’s a breakdown of some of the most popular forms of investment.
Investing in property is an extremely common type of investment. When investing in buy-to-let, investors can make money through capital growth and rental yields. For investors who can earn both, this provides income in the short- and long-term.
The property market is continuously changing, and property prices can increase or decrease. Because of this, there are risks with investing in property. However, investing in property for the long-term provides the opportunity to ride out price dips, so ideally, you can sell the property when the market is performing strongly. And the long-term prospects for the UK property market continue to look positive.
Investing in commodities involves buying physical goods or materials that have real uses in the economy, such as gold and oil. Prices of commodities are heavily based on supply and demand. There are a few different ways to invest in commodities. This includes personally buying and storing the commodity yourself or paying an intermediary service to do so.
It’s possible to earn lucrative returns through this form of investment. However, they often come with a high risk. Because of this, many view commodities as a form of investment suitable only for experienced investors.
Investing money in savings accounts is relatively low risk and typically produces low returns. However, cash savings in a reliable bank can provide financial security and flexibility to use the money when you’d like to.
When putting cash in a savings account, most people expect to see a gradual increase in savings through accrued interest. However, saving rates are at record lows, making it difficult to earn much or any interest at all. This is leading to less people using savings accounts as a form of investment.
Investors can buy and sell stocks and shares of companies that are publicly listed on the stock market. Some companies have privately held shares. When buying stocks or shares in a company, the investor becomes a part-owner and shareholder of the business.
Investors buy equity in hopes to receive shareholder dividends and capital gains through the stock rising in value. If it were to increase in value, the investor would receive the monetary difference when selling the shares. This is a high-risk form of investment as the stock market can be volatile.
When investing through bonds, an investor is essentially lending a government or company money. In exchange for that, the investor typically earns a fixed rate of interest, which can provide a steady income stream. When the bond reaches maturity, the original cash put in should be repaid. Investors can also sell bonds at a higher price than was initially paid.
The main risk that comes with investing in bonds is that the organisation you’ve provided money could run into financial trouble and be unable to meet their interest payment obligations. You could even lose all of the money you gave them.
There are a wide range of alternative investments. This includes cryptocurrencies, crowdfunding, antiques and collectibles. Some are helpful to diversify investment portfolios, while potentially adding high returns.
Alternative investments often carry additional risk. The risk is typically losing all of the money that has been invested. Because of this, with some forms of alternative investments, it’s especially beneficial to have some background knowledge in order to invest as successfully as possible.
Seek out professional financial advice when considering any kind of investment to ensure you find the best investment option for you.