Such a loaded question but one that is frequently asked by too many. The matter of fact is that investing is a buzz word that a lot of people like to throw around but may not truly understand. Did you know that you don’t have to be putting your money into the stock market to be investing? In this article, we will talk about different types of investments, how they have panned out for me and whether or not you should consider investing in them.
Types of Investments
Stock Market: There are several different stock markets to invest in, even within the US (Other countries have their own stock markets as well). The most well known are the NASDAQ (National Association of Securities Dealers Automated Quotation System) and NYSE (New York Stock Exchange).
If you follow the markets, then you have probably heard the terms “S&P 500” or “Dow Jones”. These are the most common indices that investors use to track the inter-day fluctuations within the market, which helps them interpret any major price swings.
You can invest in the stock market using an account that lets you access it, including a 401k, IRA or brokerage account. Once you deposited money into the account, it is yours to trade for what you want.
Some examples of what the stock markets let you invest in include Stocks, Bonds, Mutual Funds, Index Funds and ETFs (exchange traded funds).
I personally have been investing in ETFs and Index Funds for over 6 years now. We have had quite a bull market (general positive trending market with positive outlook) these past years which I have benefitted from greatly. I invest through both retirement accounts and brokerage accounts.
I would highly recommend that anyone considering investing but doesn’t have retirement accounts through work to consider opening an IRA and investing within that vehicle.
Real Estate: This asset class is another great investment. Real, tangible assets that you can force appreciate and have a direct hand in their performance. Real Estate can seriously come in so many shapes and forms that it would be hard to find a style that didn’t fit what you were looking for in an investment. If you are looking for profit, a tangible asset and the bonus of potential appreciation, then real estate may be for you.
In my personal experience, I have invested in one multi-family home so far but plan on acquiring many more in the future. Ensuring that the Return on Investment (ROI) of a property before you buy is at least higher than the average return of the stock market is incredibly important. Although I do believe real estate is a great addition to your portfolio, it requires a lot more hands-on work than just investing in the stock market. Don’t go through the hassle if you aren’t even going to outperform the stock market which you can just throw you money into.
Cryptocurrency: A very interesting and somewhat new (approximately 11 years) asset class. Cryptocurrency is a tricky subject for sure. A lot of “gurus” will tell you to avoid it like the plague, but in my opinion, they are just scared because it is far more of an unknown than the stock market. Some say it is just a fad however I do not think cryptocurrency is going anywhere anytime soon.
As long there are unstable countries who’s banks are collapsing and taking their customers money from accounts. Cryptocurrency will be around so that family members of those living in these countries have means of which to send their loved ones money to survive.
My personal experience investing with crypto has been very positive. My caution is to not invest money into cryptocurrency that you should have working for you elsewhere. For example, do not invest in cryptocurrency before you max out your Roth IRA ($6k limit as of 2019). Invest money in crypto that is extra outside of your other investments.
All of the investment choices listed above are great in various situations. There is no one-size-fits-all answer when it comes to investing as each individual person is facing their own individual circumstances. So remember when you are reading what worked for me, that doesn’t necessarily mean that is the best choice for you. No matter what investment you decide, it is important to conduct your own due diligence to fully understand it prior to putting any money into it.
Lastly, keep your eye out for part two of this series! In that article we will look over even more ways to invest your money, be ready. :)
If you have invested in any of the options above, let us know in the comments!
For some more recent dink’s articles, check out these three below!