Home Finance 5 best ways to invest your money and why

5 best ways to invest your money and why


Successful investing is all about how much you know. There are lots of investment options out there, but not all of them will be right for you. It is important to get good advice on managing your investments and to have the right tools at your disposal. Here are the five options for investing your money that consistently offer the best value:

1. Stocks
Stocks are risky and the older you are, the less time you have to bounce back if you lose a lot of money. However, they can be very lucrative. A simple formula that can use to determine how much to invest is to subtract your age from 100, the remainder is the percentage of your portfolio that you should put into the stock market. To lower your risk, you can opt for a mutual fund that has a focus on the stock market or try bonds instead.

2. Bonds
If you have too little tolerance for risk to invest in the stock market, you can invest in corporate and government bonds. These bonds provide lower returns than stocks, but there is less of a chance that you will lose money. You can buy both stocks and bonds to avail yourself of their respective advantages.

3. Real Estate
During periods of inflation, property values go down. The main principle of all investing is to buy low and sell high so this is the perfect opportunity to invest your money in real estate. It is important to make sure that you have an adequate sum set aside for this so that you do not have to dip into your retirement savings.  Of course, you should also find out as much as you can about investing in real estate before venturing into these waters.

4. 401k
A 401k allows you to set money aside over the course of your working years until you get to retirement age. It is recommended that you place 10 percent of your salary into your 401k. You will want to start doing this as early as possible so that you have more money once you stop working. One of the big benefits of a 401k is that your employer may match the first five percent of your contribution.

5. Exchange Traded Funds (ETF)
These are like mutual funds but they offer more variety and are traded in a similar way to stocks. The benefit of this investment type is that an ETF portfolio has various smaller investments; this means that you are spreading your risk among different securities. ETFs are also less expensive than buying the individual stocks.

The world of investment offers many ways to lose your money and very few that provide consistent gains. The methods listed above are not the only ways to invest, but they are among the most reliable.

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