How to invest your money - 8 ways

How to invest your money in order to make it grow

The following is a list of the 8 main investment alternatives that exist in the market, Each alternative includes a brief description of it, its main advantages and disadvantages, and a personal comment that will help you compare it better with others and choose the right one

Actions

Shares are securities that some companies issue for the purpose of financing, and which give the holder certain rights such as receiving dividends in case the issuing company distributes them and obtain profits

Investing in stocks involves buying these securities in order to sell them later at a higher price than they had at the time of buying (and thus making a profit), and/or receive dividends (and thus obtain a rent)

Advantages of the actions

They have a high potential for profitability (investing in stocks can yield a return much higher than what could be obtained by investing in traditional investment instruments such as savings accounts and time deposits)
It is not necessary to have much capital to start investing in them (although it must be taken into account that due to the commissions that have to be paid at the time of purchase, investing in them a small amount might not be profitable)
Have a high degree of liquidity (stocks can be easily converted into cash as they can be sold quickly)

Disadvantages of actions

The market in which they are listed is a highly volatile market where any economic, political or social event can significantly affect the value of an action from one moment to another
It is necessary to have the technical knowledge that allows you to invest adequately in them

Investing in stocks is an attractive alternative where an investor can get a good return for his money, but usually when he invests in the medium or long term and has the patience enough to not rush to sell them before the first fall market

Bonds

Bonds are debt securities that some companies, governments and other entities issue for the purpose of financing, and which give the holder the right to receive the periodic payment of interest that is fixed in advance and does not vary during the life of these

Investing in bonds involves buying these securities in order to receive the periodic payment of interest, and thus to obtain an income

Advantages of the bonds

Offer a greater potential for profitability than other fixed income instruments such as savings accounts and time deposits
Are a low risk investment (before investing in a bond you know how much interest you will receive and you are sure that these will not change until the bond matures)
It is not necessary to have the technical knowledge to start investing in them

Disadvantages of the bonds

Offer little potential for profitability compared to equity instruments such as equities
Unlike other fixed income instruments such as savings accounts and time deposits, are usually not insured by government entities, so there is a risk that the issuer will not pay the promised interest in case of bankruptcy

Investing in bonds is a good alternative for those who would like to receive the periodic payment of interest and who, because of their low risk tolerance, would also like to know in advance how much they are going to receive and how long it will take To be invested their money

Real estate

Investing in real estate consists of physically buying real estate such as houses, apartments, commercial premises, offices, land, etc., in order to sell them later at a higher price than they had at the time of purchase (and thus obtain a profit) And/or rent them (and thus obtain an income)

Advantages of real estate

Offer a high potential for profitability (investing in real estate can become quite profitable, but generally in the medium or long term)
Are an investment that is generally safe (the value of real estate hardly decreases and, on the contrary, usually increases with time)
Are a relatively simple investment (little technical knowledge is required to start investing in them and then to manage them, at least in comparison with other investment instruments such as stocks)

Disadvantages of real estate

You need to have good capital to start investing in them
It is necessary to have market knowledge that allows one to choose the right property, and then to ensure that it increases its value or can be rented quickly
Have a low degree of liquidity (it is not easy to convert a property into cash, since it usually takes time to find a buyer for it)

Investing in real estate is one of the best investment alternatives that exist because it allows one to have an asset that hardly loses its value and which, despite the losses it may have, in the long term (about five, ten , Twenty or thirty years) is very likely to be worth considerably more than it is now worth

Mutual Funds

Mutual funds are funds made up of the contributions of natural and / or legal persons, which are collected, administered and invested in other financial instruments in order to grow them, by fund management companies.

Investing in mutual funds involves buying shares of these funds in order to sell them later at a higher price than they had at the time of purchase, and thus to make a profit.

Advantages of mutual funds :

Are a low risk investment (mutual fund money investments are made by professional investors and in a diversified manner).
You do not need a lot of capital to start investing in them (most mutual funds allow you to start investing in them with just $ 100).
Are a simple investment (no greater financial knowledge is required to start investing in them).
You can immediately invest in them (it is only a matter of approaching a fund management company or any bank that offers this product, ask about the types of mutual funds they offer, and request the opening of one).
Have a high degree of liquidity (money invested in a mutual fund can easily be converted into cash, since one can dispose of it at any time).

Disadvantages of Mutual Funds :

Offer little potential for profitability compared to other investment instruments such as stocks and real estate.
You have little control over them (investments of money from a mutual fund are made by the fund management company).
It is necessary to pay commissions to the company managing the fund.

Mutual funds are the ideal choice for those who would like to get a return for their money greater than they could get with traditional investment instruments such as savings accounts and time deposits but do not have the knowledge to invest in Other instruments more complex such as actions, or are not willing to take the risk involved.

Time Deposits

Time deposits are accounts managed by banks and other financial institutions, which offer the payment of certain interests to those who place and keep their money in these for a certain period of time.

Investing in time deposits means putting money into these accounts in order to collect the interest you offer once the agreed term has been met.

Advantages of term deposits :

Are a safe investment (before investing in a term deposit, you know what interest you will receive and how long your money is going to be invested).
You do not need a lot of capital to start investing in them.
Are a simple investment (it is only a matter of approaching a bank or a financial institution that offers this product, ask about the types of term deposits they offer, and request the opening of one).

Disadvantages of term deposits :

They offer little potential for profitability (they tend to offer higher returns than those offered by savings accounts, but lower than those offered by higher risk alternatives such as mutual funds and equities).
Have a low degree of liquidity (once money has been invested in a term deposit, one can not have it until the agreed term is reached, unless it pays a fine that is usually high).

Time deposits are the right choice for those who are risk aversion, but would like to get a return for their money greater than they could get by putting it into a savings account, in exchange for not touching it for a certain period of time.

Foreign exchange

Investing in foreign exchange consists of buying currencies such as dollars, euros, yen, pounds, etc., in order to sell them later at a higher price than they had at the time of purchase, and thus to make a profit.

Advantages of currencies :

Offer high potential for profitability (investing in foreign exchange can be quite profitable, but also quite risky).
It does not require much capital to start investing in them.
You can invest in them at any time and from anywhere in the world (investing in them through the Forex market, which is completely electronic).
Have a high degree of liquidity (currencies can easily become cash, since there is always someone willing to buy them).
Usually the agents through which they buy offer leverage to investors, thus giving them the possibility that they can operate with a larger amount than the invested.

Disadvantages of currencies :

(The foreign exchange market is a highly speculative and volatile market, where any economic, political or social event can significantly affect the value of a currency from one moment to another).
You need to have technical skills that allow you to invest properly.

Investing in foreign exchange is an alternative where you can earn enough money in a short time (due mainly to the possibility of leverage), but also presents a high risk, especially if you do not have the knowledge and proper preparation .

Gold

Investing in gold consists of buying gold, either directly (for example, through ingots or gold coins) or indirectly (for example through gold deposit certificates or investment funds specializing in gold), with In order to sell it later at a higher price than it had at the time of purchase, and thus obtain a profit.

Advantages of gold :

Offers good potential for profitability (investing in gold is profitable, but usually in the long run).
Is a safe investment (the value of gold hardly decreases mainly because it is not regulated by governments, but is determined by supply and demand, and, on the contrary, usually increases with time because Higher demand and lower supply).
It is a simple investment (little financial knowledge is needed to start investing in it).
Presents a good degree of liquidity (gold can easily be converted into cash as it can be sold at any time).

Disadvantages of Gold :

Its value is unstable in the short term.
Does not provide any type of income.
In the case of buying physical gold, it requires care and maintenance, and there is a risk that it may be stolen; And, in case it is left in custody in a bank, it is necessary to pay a high cost for it.

Investing in gold is considered an investment refuge that investors usually perform in times of crisis in order to prevent the value of their money decreases; But it is also often considered a profitable investment in the long term as its value tends to increase in the long run as more and more investors and fewer gold reserves are involved.

Works of art and collectibles

Investing in works of art and collectible objects consists of buying paintings or sculptures of renowned artists, as well as jewelry, stamps, coins, old books, among other objects, in order to wait for them to increase their value as a result of the passage of time, And thus sell them at a higher price than they had at the time of purchase.

Advantages of works of art and collectibles :

Offer a good potential for profitability (investing in works of art or collectibles, in some cases, can become quite profitable in the long run).
Are a simple investment (it is only a matter of buying the artwork or collectible object and saving it at home or leaving it in custody at a bank).
Possessing them gives one a feeling of satisfaction and enjoyment, especially if he is a collector or likes the type of work of art or collectible object acquired.

Disadvantages of works of art and collectibles :

They do not provide any rent (unless they are rented to any art gallery or museum).
Require considerable care and maintenance (any cracks or deterioration could reduce part or all of its value).
There is a risk that they may be stolen or destroyed in a fire or other disaster, and if insurance is purchased, it is usually very costly.
One runs the risk of being scammed (that one is sold a counterfeit piece or, worse, stolen).
Have a low degree of liquidity (works of art and collectibles are not easy to convert into cash, since it is not easy to get a buyer quickly for them).

The investment in works of art and collectibles is a great alternative for collectors or for those who like a particular work of art or collectible object; But also for those who want to diversify their investment portfolio or simply want to give this a touch of distinction.