What are the Best Investment Alternatives to Stocks?
Interested in learning what some of the alternatives there are to stocks when it comes to investing? We have everything you need to know right here.
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As a financially literate person, you know that when payday rolls around, you have some choices to make. You’ve got to pay your bills and take care of the essentials first, but what should you do with the rest of your money? You should definitely consider putting a portion of it away to save, but you may also want to consider doing some investing.
People like to invest because there is the chance that you’re going to get a bigger return on the amount of money you originally invested. One of the most popular ways to do this is with the stock market.
But are there other ways to invest besides stocks? If you’re curious to learn about alternatives to the stock market when it comes to investing, then you’ve come to the right place. We’re going to go into detail about:
- Reasons why you should invest in the first place
- Common investments to consider
- The best investment alternatives to stocks
Why you should consider investing
You don’t have to be a financial pro to invest successfully
While you should always save some of your money either in a checking or savings account, the truth is it’s not going to earn a lot in either of those types of accounts. They’re necessary in order to have easy access to your funds so you can pay for everyday purchases, as well as bigger ticket items when the time comes. At the end of the day, you want to also consider putting some of your money towards investing. But why should you consider this route?
- Watch your money grow. When you choose to invest, you’re giving your hard earned money a chance to work for you. Depending on the types of investments you choose, your money will expand in the short or long term, giving you a better return than if it sat in a savings account.
- Save more for retirement. Many people working today are also working for their retirement. Whether they’re taking advantage of their employer’s 401(k), or have an individual retirement account (IRA) of their own, this money is put aside in order to help them in the future. Investing in the right places can give you peace of mind knowing you’ll be able to support yourself later in life.
- Reach your financial goals. In addition to retirement, investing can help you reach your goals in a shorter amount of time. Because of the higher rate of return, your money will grow faster so you can use it to buy a house, start a business, or send a child to college.
Common types of investments
When most people discuss investing, the stock market typically comes to mind. Stocks are bought and sold on this market and give investors a small piece of a specific company. Companies that want to raise funds sell these stocks so investors can purchase them, and ideally sell them later for a profit.
In addition to stocks, there are other investments you might be interested that you can purchase and sell along with stocks such as:
- Bonds. These are loans you make with the government or a corporation agreeing to the fact that the government/company will pay you back with interest.
- Mutual funds. This type of investment is ideal for those who aren’t interested in picking and choosing stocks and bonds. Mutual funds allow you to purchase multiple investments in one transaction.
- Exchange Traded Funds (EFTs). This investment is also bought and sold on the stock market just like stocks, but they can track a specific fund such as emerging markets, commodities, or sectors.
Best investment alternatives to the stock market
There are additional alternatives to investing in stocks and the stock market
Now that you have a basic overview of the common types of investments you see on the stock market, we think you should also be aware of alternatives to these kinds of investments. One of the best parts of investing is that you don’t have to limit yourself to just one type. If there’s something you’re interested in, why not learn more and try your hand at investing? You can have a mix of traditional investments, as well as some alternative investments and really have a diversified portfolio that works for you. The bottom line is they’re all ways to make your money work harder for you.
- Real estate investment trusts
Many people would like to get involved in investing real estate, but it can be quite expensive to get started. Instead, consider investing in real estate investment trusts that allow investors to invest in a variety of properties and have the rental profits distributed to the owners.
Did you know that you can invest in commodities such as gold, silver, and other precious metals? You can choose to buy something physical such as coins or bullion if you want to store it yourself, or purchase gold certificates from a company that you can exchange for gold.
One of the newer alternative investment options, cryptocurrency might be something you’re interested in. Crypto is a digital currency that uses block chain technology to buy and sell, as well as to keep it secure. There are all kinds of cryptocurrencies out there (the most recognizable is BitCoin), but their prices can rise and fall very quickly. However it doesn’t take much to invest, so this could be a good way to try out investing with less risk.
- Peer to peer lending
You can also choose to invest in other people’s needs. This type of investment lets you lend money out to different people, in the hopes they’ll pay you back with interest. While most will pay it back, there’s always the risk some will default and you’ll lose all your money. Spreading out these loans among a variety of individuals would lower your risk of losing out.
Investing is always a great option if you’re looking to achieve financial goals, or just save more for the future. Consider some of these alternatives to the stock market and see which ones work best for you!
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