It’s important to learn the different ways to invest the money you’ve worked hard to earn. It’s easier to decide which ones are right for your investing goals once you understand the available choices.
Invest in bank and term deposits
How this works is, for a fixed period, you invest an amount with your bank and earn interest. Interest can be paid on a monthly, quarterly, or annual manner. A bank offering of 2.00% on balances above $500 is an example of a bank deposit. An offering of 4.99% p.a. for 12 months is an example of a term deposit.
This type of investment is loaning your money to a company. They will then provide you with a fixed return, which is usually higher than what the bank offers. You can buy bonds in companies that may offer a return of 5.50% p.a. for 2 years.
Invest in properties
Buying houses is a common practice in investing, where you rent out the property to pay the mortgage. It can also provide you an income from the increase in property value over time.
Most of the time, investor mortgages require 35% or 40% of the price of the house upfront. The rates of returns differ depending on the property type and location.
Buying a share means buying a piece of a company. The more you buy is how much you own the company. Simple, right?
What makes this attractive is the dividend. You buy shares believing the price will go up in time. Although the price can go up, it may also be risky as it can also go down anytime. You make or lose the actual money once you sell your shares.
This is a current type of investment where you lend your money to a platform, which lends it to borrowers. This offers higher returns than those by banks. The platform assesses the borrower’s repayment capability before lending out your money.
Same with peer-to-peer investments, private companies lend your money to borrowers, usually in short-term loans form. With a minimum investment of 2 years, a 9.00% p.a. is what finance companies can pay you as a return on your money. Once it’s up, you can withdraw the money or reinvest it.
A managed fund can consist of 1,000 shares, where your investment is spread over. The performance of the managed fund depends on all of the investments that comprise your fund.
To operate the managed funds, annual fees are usually included ranging from 0.10% to 5.00% of the value of your investment. As there may also be entry and exit fees, managed funds often form part of a long-term investment strategy.
A business or venture
This could be buying into an existing operation or a startup. With this investment, you can be passive, meaning you don’t have to do anything. Or, you can actively work in the business.
Beware that this is an investment with a high risk. You may be required to expend more than you originally planned to keep it going in the short term. It’s really important to understand the in and out of the business before you proceed.
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