The world of finance is very challenging and often intimidating. Investing then largely depends on one’s experience. Investing is a different way to think about making money; it is making money through money. Making one’s already earned money work maximizes one’s earning potential without much effort.
There are many ways and immense investment opportunities which one can opt for. However, no matter which method one chooses to invest, the goal is to invest the money in such a manner that it earns an additional profit for the investor.
A keen investor does not spend all of his/her money at any random investment. That is not how the field of investments and finance work. He/she estimates and analyses the different investment opportunities available, and puts the money where there is an expectation of reasonable profit. Proper investment planning would ensure financial stability during bad business days and retirement.
Let us move forward to the five investment opportunities one can try opting for:
Mutual funds:
A mutual fund is a collection of bonds and stocks. It is a pooled investment option by an investor which allows them to invest their money in bonds, stocks, and other investment vehicles. It allows the investors a diversified exposure to a number of investment holdings.
A mutual fund is one of the biggest investment opportunities and is set up with a specific strategy in mind. It can be large stocks, small stocks, company bonds, government bonds, industry stocks, etc. They are valued at the end of the business day, and transactions can be executed anytime of the day.
Mutual funds make returns in the form of dividends, capital gains, and interest. Trading a mutual fund can also be a good option for earning additional income, although it comes with its own set of risks. Investors, who wish to invest their money with a balance of fair returns and risks, choose mutual funds.
Stocks and shares:
Investing in stocks is considered as one of the best investment options. It is important to analyze the share before investing in it. If the investment is for a period of more than ten years, then the probability of higher returns is very high. Buying the shares of a company gives the investor an opportunity to participate in the company’s success with an increase in stock prices and reduced dividends.
Also, in some cases, shareholders get a claim on the assets of the said company in case of company liquidation.
Shareholders have voting rights in meetings and hold a major stake in the company. This particular investment option can give huge returns and provide long-term benefits to the investors.
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Bonds:
Falling under the category of fixed income securities, a bond is a fund for debt. Bonds are loan instruments whereby an investor lends money to an individual/ company or an agency, in exchange for regular interest payments, and also the bond’s face value when the bond matures. Bonds can be issued by governments and/or other big corporate houses.
Bonds can be purchased as new offerings or in the market, similar to stocks. A bond’s value can increase or decrease based on a number of factors, most important being the level of interest rates. Bond prices are inversely proportional to interest rates.
The main attraction of bonds as one of the growing investment opportunities is the stability and security they offer. The bonds are guaranteed to give you positive returns. However, the lower the risk, the lower is the rate of potential returns.
ETF Investment:
ETFs, better known as exchange-traded funds, are similar to mutual funds. However, unlike mutual funds, they are traded on the stock exchange during the trading day, similar to shares. These are also valued and estimated constantly while the markets are open.
In recent times, actively managed ETFs have come into the limelight with smart beta ETFs, which create indexes based on factors like momentum, stability, and volatility. Hence, they have come up as good investment opportunities in the recent years.
Alternative Investments:
As mentioned earlier, investments have an endless scope and thus go beyond shares, stocks, bonds, mutual funds, ETFs and many other options. Investments have huge opportunities to diversify, and this is what alternative investments involve.
Real estate, P2P Lending platforms like Finzy, gold, private equity, hedge funds are some alternative forms of investment opportunities available. Real estate is a rising sector and hence has scope for investments. Such investments can be made by making a purchase of a residential or commercial property. Gold and other commodities are also good opportunities for making an investment.
The prices are always rising, and hence can be made use of. Hedge funds and private equities are opportunities not available to everyone as they possess certain criteria of income and net wealth for the accredited investor, but are highly competent in earning returns.
The alternatives space is a guaranteed zone with little risks. They prove to be extremely helpful in times of market crashes when other investments produce very little. The overall downfall of one’s portfolio can be reduced with such investments.
There are various types of investments and approaches to choose from before investing. One must be clear about the pros and cons and then decide wisely.
Well researched and well written article. Such a informative post.
Thanks for sharing valuable information.
Thanks Rohit…the credit goes to Jagdeep Malik who took his time to bring out this article in the site. He submitted the post through – Submit Post. We invite posts from guest bloggers.