Last Updated on May 20, 2021 by MoneyVisual
Money is an essential commodity in life. Though some may argue that money is not everything, there is no denying the fact that almost all aspects of life need money in some form or the other. If you have earned money, however much it is, it is probably not a good idea to waste it in a vault. Invest it somewhere reliable instead.
Money sitting idle is money not well used. Instead, channel it to some portal where it is more likely to multiply. This process is known as investing. It is one of the essential methods of making money from money itself. People who have invested small amounts in initial days of earning have ended up making thousands and lakhs in a few years.
All you need to do is find a reliable entity, do proper research about it, and then invest. Yes, there is a certain amount of risk that is associated with it, but you cannot far ahead in life without taking a certain amount of risk. Investing has become all the easier and more exciting in 2020, as many avenues are open for this purpose. If you are wondering how to channel your money in the right direction by investing properly, this article might be of some help to you.
Investing Money for Beginners
There is no age-limit for investing. You can even start as early as your 20s. Of course, your capital for investment won’t be that large, but it is going to be adequate anyway. When you invest in a company or a commodity, you are buying a part of it. Whatever money you earn from it is because the company will prosper in the near future and establish itself in the market.
As a beginner, you must do your research about which company has the potential to reach to higher levels so that you can earn from it. It is also imperative that you understand that it is not a quick rich policy. You need to have the patience to get the result you want. Since most investments work on the concept of compounding interest, the chances of accumulation and multiplication are much higher.
How to Invest Money to Make Money
There are two types of investment that you can look into. Short-term investment means trading in stocks on an almost daily basis and having an income out of it. Though the profits will be small, when accumulated over some time, it can become substantial. However, the main source of income from investment comes when you leave it for a longer period. The risks involved are also relatively less in this scenario as the chances of at least breaking even and generating larger profits with the investments are pretty high.
Top 5 Best Low-Risk Investments with the Highest Returns
- The Stock Market – The stock market is undoubtedly one of the best modes of investment for new and seasoned investors alike. When you buy a stock in a company, you purchase a portion of it. The value of the company increases as they make profits. These profits are distributed back to the stockholders in the form of dividends, based on the number of shares you have. Thus, if you are sure that a company will prosper shortly, investing in the stocks of it is an excellent idea.
- Investment Bonds – When you invest in a bond, you are loaning out money to a company for their benefit. In exchange for the loan, the company will be giving you interests, other than the principal amount, at a particular rate. This type of investment is relative to less-risk as you are sure to get back the money but the total profit out of it less.
- Mutual Funds – The concept of mutual funds is to invest in multiple stocks at one time so that the chances of earning from it are more. There is a catch, though. Mutual fund investors take a fee to invest, and you have actually to compensate that to calculate your profits. Therefore, it is not an ideal investment but still has enough potential.
- Savings Account – This is the conservative approach of investment. You keep your money in a savings account in an organization that allows it, mainly the banks. You get interested out of it, but the amount is again relatively less when compared to others. However, an income is guaranteed, and your money is secure.
- Commodities – Lastly, you can invest in commodities like gold. This type of investment is secure against economic turmoil.
Principles to Invest your Money Wisely
There are 4 Ms when looking at the principles of investment:
- Management – Be aware of the management of the company before investing in it. This way, you can put your faith in a company easily.
- Meaning – Whenever you invest in something, it should have some meaning to you.
- Moat – A company should have a moat around it, that is, it is safe from its other competitors in the same niche.
- The Margin of Safety – You should be aware of the difference between the true value of a company and the stock price so that you can make a better investment.
Ways to Invest Money in Your 20’s
You can start investing at a considerably young age, even in your 20s. However, the first thing that you should go for is paying off your outstanding debts. Once that is cleared, you should do proper research about a company and then invest in their stocks at the right time.
What’s the Best Way to Invest Money?
If you look at it from the financial and profit point of view, investing in stocks is probably your best option. The returns you get out of it are the highest. However, as mentioned before, there is always an associated risk factor. If you are looking to keep your money secured, a savings account is a potent option. The employer credit check can likewise go far in deciding the believability of an organization that you can consider while contributing.
To conclude, investments should be smart and efficient, along with it being safe and secure. Take a call when you are very sure.