Saving is a wise choice. It helps one accomplish their goals, gives them a safety net in case of emergencies, and helps relieve stress. Money not spent today can also be used to generate interest. This article covers a variety of assets one can invest in to stop their funds from deteriorating in value and potentially make a profit.
Key takeaways:
- The number of cryptocurrency use cases is rising, making them a valid investment.
- Stocks are a volatile asset that can make significant profits but come with a risk.
- Savings accounts are a good choice for short-term savings.
- A certificate of deposit has a higher interest rate than a savings account but limits access to funds.
- The value of gold is stable, but it cannot generally make one a profit.
- There is more than one way to invest in real estate.
Volatile assets
These assets can change their value significantly, often unpredictably, over time. This can be seen as both an advantage and a disadvantage. They have the potential for high profits, yet there is also a risk involved when investing in them.
Cryptocurrencies
These are digital currencies running on blockchain technology, not governed by a central authority, such as a bank. Certain cryptocurrencies have experienced a considerable rise in value since their inception, and the number of their use cases is increasing, making them a legitimate investment choice. Despite many of them being volatile, there also exist so-called stablecoins that have their value pegged to a certain asset, such as the US dollar in the case of Tether. Cryptocurrencies can be used for multiple purposes, such as buying cars, buying tech products, and gambling. Cars can be purchased for crypto from manufacturers like Ferrari, Lamborghini, and Tesla, alongside many car dealerships around the world. Gambling using Tether offers many benefits, including anonymity and instant withdrawals, according to the latest Tether casinos guide. Making the most of casino bonuses and promotions can help users get better value for money and hopefully make some winnings to add to their savings pots.
Stocks
Buying stocks or shares grants a person ownership of a portion of a company. Companies issue shares in order to fund their own growth. As an owner of shares, one is entitled to vote at shareholder meetings on matters of corporate policy and actions. Voting power is proportional to the shareholder’s number of shares. There are two ways one can make money from owning stocks, which are dividends and capital appreciation. Dividends are a percentage of the company’s profits paid to shareholders, usually on a quarterly basis. Should the value of shares increase over time, the owner can sell them to make a profit.
Investing in shares has its advantages. Unlike real estate, for instance, they are highly liquid assets and often do not require a large one-time payment.
Deposit accounts
Savings account
Unlike the previously mentioned assets, a savings account is a risk-free choice. There is no volatility involved, and up to $250,000 is insured by the Federal Deposit Insurance Corporation (FDIC). Savings accounts offer a moderate interest rate. It is dependent on the Federal funds rate, and banks can adjust it over time according to economic factors. A savings account can be linked to a checking account to facilitate easy transfer between them. Opening a savings account is recommended for short-term savings or when easy access to the deposited money is needed.
Certificate of deposit
A certificate of deposit (CD) offers a fixed interest rate and limited access to the deposited funds, in contrast to the savings account’s fluctuating rate and free access. When opening a CD, a number of factors are specified:
- Principal: This is the amount of money deposited.
- Interest rate: CD interest rates are higher than those of savings accounts.
- Term: This is the amount of time the depositor agrees not to withdraw money.
The term is usually within the range of 3 months to 5 years. Withdrawing funds before the term ends will result in the charging of a penalty, which makes CDs a good choice only if the depositor is certain they can forgo access to the money during the term.
Tangible assets
Gold
Storing wealth in the form of gold has been done throughout history. While it does not usually provide a return on investment, gold is a great hedge against inflation as its value is particularly enduring in times of currency instability. There are multiple ways to invest in gold, which are summed up below:
- Stocks: Shares in companies that mine or refine gold can be bought as an indirect way of investing in the precious metal.
- ETFs: These are investment funds traded on stock exchanges that, much like gold stocks, allow one to invest in gold without physically possessing it.
- Bullions: These are gold bars or coins of a high level of purity. The purity of investment-grade bars is 99.99%.
- Jewelry: Buying gold jewelry as a form of investment is generally not suggested, since its purity is not standardized.
Real estate
One way of investing in real estate is through rental properties. Obtaining a mortgage usually requires a 20% to 25% down payment. For those who are capable of making this payment and have adequate DIY skills, purchasing rental properties might be a good option, as the value of real estate is usually rising. There are, however, downsides to this approach. Some find managing tenets bothersome, and periods of vacancy can occur, during which mortgage payments are not covered by rent. One alternative is investing in real estate investment trusts (REITs). A REIT is a company that uses investors’ money to buy real estate. Investors then receive dividends much like when owning stocks. It is usually a liquid asset and allows one to invest in real estate without having to manage it personally.
Conclusion
Deciding what to invest in is never an easy choice. It is important to consider one’s goals and do thorough research before making a decision.
Peyman Khosravani is a global blockchain and digital transformation expert with a passion for marketing, futuristic ideas, analytics insights, startup businesses, and effective communications. He has extensive experience in blockchain and DeFi projects and is committed to using technology to bring justice and fairness to society and promote freedom. Peyman has worked with international organizations to improve digital transformation strategies and data-gathering strategies that help identify customer touchpoints and sources of data that tell the story of what is happening. With his expertise in blockchain, digital transformation, marketing, analytics insights, startup businesses, and effective communications, Peyman is dedicated to helping businesses succeed in the digital age. He believes that technology can be used as a tool for positive change in the world.
