InvestingĀ is the action of giving money or capital to an endeavor with the hope of obtaining additional income or some profit. Essentially it is trading in the money you have right now with the hopes of getting more back in the future as a result.
People will invest in all kinds of things, ranging from stocks in publicly traded companies, bonds, real estate, mutual funds, ETFs, and more. The more money that someone invests, the more money they are likely to receive as a return if there is a profit made by the entity that they invested into.
Figuring out the Assets You Want to Own
It is not particularly wise for you to just throw money out into the pitch black and hope for the best. When you want to start investing, it is important for you to figure out what kinds of assets you would like to own and being aware of what assets would potentially yield some worthwhile returns. You need to account for time, factor in inflation, as well as adjust for risk. The more you know about all of these things and how they work, the better chance you will have of picking a winner.
Investing in Stocks
Stocks are one of the most commonly pursued forms of investment. A share of stock represents a piece of a company that you own. The more shares that you own, the more money you could earn back if the company does well. At the same time however, there is much more money that you could lose should the business tank and completely go under. Everything varies depending on the value of the stock, which changes based on how well the company is doing at any given moment. That said, there are numerous companies in which investments could be made.
Privately Held Businesses
Investing in a privately held business could be an extreme risk at the start. You have no idea how things might turn out and it could all go rather poorly pretty quickly. However, if the idea is good enough and the company is run properly, then there is a chance that the reward for investing could be incredibly high. Usually when someone invests in a privately held business, it is a business that they personally own and run. However, this is not necessarily always the case, as other people may still invest on a smaller scale.
Publicly Traded Businesses
The more commonly known investment in business involves publicly traded businesses. These are the kinds of businesses that stock may be bought in, which will then give you partial ownership of it. When you buy enough stocks and end up owning more than 50% of the companyās stock, you are given primary ownership of it. This whole process is known as Initial
Investing in Fixed-Income Securities (aka Bonds)
When you are giving money to an issuer of a fixed income security, you are essentially giving them money in exchange for someĀ interest income. You can do this by buying certificates of deposit (CDs) and money markets, or by investing in tax-free municipal bonds, corporate bonds, or U.S. savings bonds.
These are all bought through a brokerage account. You can choose between a full-service or discount model. The minimum investment varies, but it usually ranges from $500 to $1,000.
Investing in Real Estate
Investing in real estate is one of the oldest kinds of investments there is. You have a lot of different options available to you, but the more common method is developing something and then selling it for a profit. Alternatively, the other common method is buying a property and then allowing other people to use it in exchange for regular rent payments. When applied to the right investment, this could end up yielding some high returns for the person doing the investing.
Take a look at a couple of different ways you can make money simply by having money. This way you can earn more money down the road, and not have to lift a finger.
Invest in a High Yield Savings Account
Saving money is an important, financial clichƩ heard time and time again. But the truth is that saving money is not only important for unexpected financial disasters, but for your monetary growth as well. Investing money into a high yield savings account can mean earning extra cash annually just for keeping your money in the bank. The national annual percentage yield (APY) for savings accounts are 0.09%. While high yield savings accounts on the other hand, can produce upwards of 2% APY. If a person were to place $2,500 into a high yield savings account, they would earn approximately $50 annually. This may not seem like a lot, but overtime the compound interest and growth will accumulate, leaving you with more money in the long run than what you initially put in.
Store Savings into a Retirement Fund
Retirement is inevitable with age and time. TheĀ Motley FoolĀ estimates that the average individual will spend 18 years in retirement. So why not invest any savings into a 401k or Roth IRA as soon as possible? The truth is, the sooner a person invests in their retirement fund, the more money they will earn through interest and thus have more to spend in their older years. There is no set retirement savings amount to aim for, the amount of money a retiree will need annually depends on their state of residence, their lifestyle, and several other factors. According toĀ GOBankingRates, a million dollars in retirement savings could be easily spent in under 12 years based on the state retirees choose to reside. So protect your future, and invest in a retirement fund.
Grow Money through Certificates of Deposit
Certificates of deposit (CDās), otherwise known as money market accounts, are savings accounts with higher fixed interest rates than traditional savings accounts. CDās have a set maturity date, so investors have to leave their money untouched for a set length of time. Unlike savings accounts, CDās donāt allow individuals to withdraw funds whenever they choose because they have a set withdraw date, but the return on a CD is far greater than that of even a high yield savings account. CDās annual percentage yields can reach upwards of 3%, compared to the average 2% APR of savings accounts. If a person were to save $3,000 in a five year CD with 3.25% APY, they would accrue approximately $488 in interest by the withdraw date. Whereas if they saved the same amount in a high yield savings account with a 2% APY, they would only earn about $300 in the same amount of time.
Invest in the Market
Participating in the market may allow investors to grow their money so long as their money is left alone. The market can rise and dip at indiscernible times, but rather than trying to predict the flow of the market, it is advisable to simply leave the money alone. According to one of the greatest investors, Warren Buffett, it is far more profitable to invest money and ride the ebb and flow of the market than to frequently transfer funds. SigFig, an investment advisor, states thatĀ according to their data, āThe most successful investors in the group were also the least active.ā For a 12 month return, infrequent traders made an additional 4.7% profit when compared to frequent traders who only made 0.13%. So if investing in the market, decide to leave the money alone and let the money grow unguided.
Consider Options and Plan Ahead
There are several safe options for individuals seeking to make a profit through financial investment. But no matter which method is chosen, there are a few things to keep in mind before investing money of any kind.
Consider investing only after you have saved at least three to six months of living wages. This amount should be able to cover rent or housing, utilities, gas, and other necessities. Donāt invest any money unless there is already a sizeable monetary fund reserved for financial calamities. If anything should impact personal finances, the savings will serve as a cushion so that you donāt dip into those investment funds.
After saving three to six months of living expenses and setting it aside, then and only then, should a person look into investment options; then decide if the money you want to invest can be spared. This means, if anything should go awry, you are still able to live comfortably without the money you have invested. If the answer is no, choose to invest in a savings account rather than a certificate of deposit so funds may be withdrawn at any time. But also keep in mind that invested funds with no withdrawal option for a set period of time, may ultimately yield more growth in the long run.
Simple vs. Compound Interest ā Understanding the Difference
When planning to borrow money, itās important to understandĀ the concept of interest. Basically, interest is the cost of borrowing money from a lender. Interest can be charged by a bank or credit union, or from LoanMart on their Car Title Loans Online. There are several different types of interest, and borrowers should understand the basic differences between simple and compound interest.
Simple Interest
Simple interest is paid only on the total amount of the loanās original principal, or the money originally borrowed.Ā Simple interest is calculatedĀ by taking the original cost of the loan and multiplying it by the interest rate and the length of the loan, typically expressed in months.
Compound Interest
Compound interestĀ is slightly more complicated. This type of interest is the amount paid on the original principal of the loan, and on the interest charged previously. At the end of each year (if the interest is compounded yearly) the interest charged is then added to the original amount of the loan and recalculated.
Interest on Car Title Loans
TheĀ interest paid on Car Title LoansĀ from LoanMart is amortized into the loan over a period of 12-36 months. This means that in the beginning, payments will mostly go toward paying down the interest, and will later be applied to the principal once the interest requirements have been met.
Amortization also means that there are no balloon payments or unexpected fees with our Auto Title Loans. Payments are set over a certain number of months, and a borrower will know what is expected to pay each month. Amortized loans make it easier to pay back a loan without coming up with a lump sum of cash in the future.
Consider the Benefits
If concerned about the interest on an Auto Title Loan,Ā speak to a friendly representativeĀ at LoanMart.
