The following is a guest blog post:
These days, putting your money in a regular savings account is like parking your money somewhere safe because the super-low interest rates do not work well to grow your money. What’s even worse is inflation can actually eat up the value of your money that is just sitting there doing nothing. If you want to see your savings grow, then you will have to dabble in investments that give a higher yield and rate of returns. Consider these methods of investing to grow your money:
Consider Investing in Real Estate
There are actually various ways to invest in real estate to help you generate wealth. First, you can buy a property and build equity, while at the same time, you hedge against inflation. Later on, when the value of the property has appreciated, you can sell the property for a profit. You can even opt to flip houses, which is buying a distressed property, fixing it up, and flipping it back into the market for a quick sale.
The NorCalREIA or Northern California Real Estate Investors Association said that investing in real estate is a smart move because, aside from the fact that no one can literally steal your property like jewelry, you can use it as an investment vehicle to provide yourself with more cash flow in the form of passive income with rental properties. This is a great way to diversify your investment portfolio. Aside from that, there are REITS or real estate investment trusts to also consider investing in.
Put Your Money in Stocks
Placing your money in the stock market is one of the most beneficial methods that you can use to generate wealth. Buying stock from your chosen company means that you own a small portion of that company that you just bought into. When the company makes a profit, also known as a dividend, they share with you or pay you an amount based on what you invested or how many shares you currently have. If the company you chose to invest on will grow and appreciate in net worth over the course of time, the price of the shares you own will also increase. This means you can sell these shares of stock at a much higher rate during that time for a profit.
Think of Mutual Funds
Instead of just purchasing stocks from a single company, investing in mutual funds is another option as it enables you to buy different kinds of stock in one purchase. The stocks in a mutual fund are usually chosen and managed by what is known as the mutual fund manager. But there is a caveat: this fund manager will charge you a professional fee that is based on a percentage of your investment. It is critical to do your research, read the terms and fine print, and ascertain the exact fees before handing your money over to a fund manager.
Opt for Investment Bonds
Investing in bonds means you are actually loaning money to either a private company or the government. The government or company offering the bond will then pay you interest on your loan to them for the period of the life of the bond. These bonds are considered less of a risk than the stock market. However, the rate of return is also much lower because the interest rates of bonds are not that high.
Special Banking Products
Since savings accounts hardly give any interest and do not work well in growing your money, you can opt for specialized banking products that offer better returns. Long term cash deposits have bigger rates, the value of which rests on the term period or time frame you give the bank to hold your money before you get them all back again. Compared to stocks or mutual funds, these special banking products still have fewer returns, but they also carry less risk.
All that being said, it is still critical to put some money in the bank in a regular savings or checking account, even though it is the worst possible way to invest your money because of the low interest. The reason you have to park your money in a savings account is that you might need to have money ready for access in times of emergencies. You can also use it to pay for investments, and you can get your daily expenses from this account.
But check into some of these investments. You want your money to grow and after you have done your homework on investing, start your investment journey as soon as you can.