Investments in various fields continue to attract an increasing number of people. Some aim for modest additional income, while others have grand plans to significantly increase their capital. Many beginners think that the hardest thing in investing is finding money that you can invest in shares of a particular company. In reality, finding finance for investment is not that challenging.
The main thing to remember is not to invest everything. Always leave at least a minimum reserve for a rainy day. If your regular income allows you to invest your money right away, it is great. If not, you can always use quick loans from Payday Depot or borrow money from friends.
However, what to do with this money? This is where the first difficulties arise. You need to understand what exactly you want to invest money in. Let’s explore the three primary areas of investment:
- Real estate,
- Business,
- Securities.
The first two are more or less clear, but let’s delve deeper into securities. First, these assets tend to have lower entry thresholds. After all, it’s always easier to start not with $100,000 but with $1,000 or even $100.
Securities include:
- Stocks. Owning a share is nothing more than owning a piece, a share of the company. Investing in shares means making money on the difference in the value of the share itself and (if there is such an option) receiving dividends. The practice of dividend payments is popular among large companies. This means that the company essentially “encourages” its investors by distributing a portion of its profits as dividends to shareholders.
- Bonds. Owning a bond means holding a company’s promissory note. What do you get by investing in bonds? By purchasing a bond at a certain time, you receive its face value (initial cost) and coupon (set %). Bonds are issued by an issuer — this could be a company in need of financing or even a government. Unlike promissory notes, the terms and amounts of income payments are predetermined when purchasing bonds. This helps bonds differentiate themselves from stocks by being able to estimate their benefits in advance and invest with guaranteed payouts.
- REITs. Real Estate Investment Trusts are real estate investment funds. The meaning of such funds is similar to ETFs — you invest in a company, and it invests and manages assets with this money. But in this case, instead of shares, it buys and monitors real estate. In addition to the similarities with exchange-traded funds, there are both new advantages and risks.
One of the main advantages is the reliability of the investment because the real estate market is stable and continually expanding, driven by the fundamental concept of real estate and the increasing demand for it. The second important advantage is the liquidity of such shares. Liquidity in the market means demand for a product, which means the ability to sell it at a favorable price at a time convenient for you. Among the risks, high taxes and the impact of rising interest rates, which directly reduce demand, stand out.
