Ever thought of doubling your hard earned cash? Some smart investment choices will help you do just that. You have to put your money at work if you want it to double. Here is how you can invest your hard earned funds.
Through Equity Investments
Most stocks are in the form of equity investments. Equity investments are a form of short, medium and long term investment strategies where a person can profit through any capital gains that are accrued on the equity of a stock or through dividend payments. A person is an indirect equity investor through a bank’s stock portfolio even if he/she has no more than a couple of hundred dollars in deposits.
You can invest in equity in a few ways:
- Common Stocks
- Preferred Shares
When it comes to stock investing, you need to understand the stock market and define rules by which you will be investing and managing your portfolio. Otherwise you can quickly loose money.
Related: How Preferred Shares Work
Related: Why Dividend Investing?
The next two sections also cover equity but they warrant their own section.
Through Mutual Funds & ETFs
These are a form of shared funds and also happen to be the most common form of equity investment. A mutual fund is professionally managed through a fund manager in order to make it possible for a group of investors to purchase a varied portfolio of bonds or stocks.
A mutual fund can be in the form of an indexed or actively managed fund. An indexed fund buys according to major indexes. An actively managed mutual fund, as the name implies, can be actively managed by a fund manager to maximize profitability. This is also why most investors prefer the latter until they start understanding the fees the pay As such, index investing has been gaining popularity in an effort to keep fees low and benefit from the market growth rather than gamble on the skills of a manager.
Through Investment Bonds
These are debt instruments that can be used to make a portfolio more diverse and can be utilized by investors to offset risk. Investment bonds are also considered to be less risky than equity investments since they prioritize bond holders over stock holders for payments.
They also guarantee a stable income for whoever invests in them for a period of time. Investment bonds can be used by a corporation that is in need of capital or by a local or regional government.
Through Jumbo CDs
A jumbo CD is in the form of certificate of deposit that comes with a sizable denomination. The minimum amount is $100,000 which is also why a certificate deposit is considered to be a stable and low risk investments for investors. The longer you keep it invested and the larger the amount, the better the interest rate will be. You cannot, however, access your money during that period.
Through a GIC
A GIC, or Guaranteed Investment Certificate guarantees a fixed rate of return from an investment project. It is also known as a term or time deposit in some countries. Through it, an investor can deposit money for a fixed amount of time before it is returned along with the rate of interest that is initially agreed upon. The rate of interest will also be more than a deposit account.
If you have contacts at a financial institution, you might be able to purchase someone’s CD if they are wanting it. You could get it at a good price and with high interest rates.
Through Precious Metals
This method goes back a long way in history. Gold was for a very long time the way to do commerce and still to this day, gold can have value in a portfolio.
Related: How To Invest In Gold
Through Venture Capital
When an investor buys part of a private company, it is known as venture capital. These are usually considered to be high risk investments since venture capitalists would place money in a company that is high risk but has the potential to grow over time. Investors will usually expect returns on their money by offering to sell shares of the company to the public or through the sale of the company itself.
Through Real Estate
Investors who want to invest in real estate usually do so in the form of a real estate trust. This is a large amount of real estate in a portfolio. An investor can become a partial owner of such a portfolio by purchasing shares in the real estate investment trust. This type of investment is a favorite for people since it can be traded easily and also allows potential investors to take part in it through a small initial investment.
Related: Understanding REITs
Through a Small Business Partnership Agreement
This is a document which allows different parties to enjoy joint ownership of a business. It details the amount of money each partner invests, their rights and responsibilities and the percentage of business income that they are entitled to.
Readers: Any other ways to invest that are missing?
Image courtesy of David Castillo / FreeDigitalPhotos.net