Building your wealth is not a walk in the park, it can be pretty rocky and sometimes people get jaded or tempted with investments. Investing your money is about scaling up and leveraging so your money works for you. You invest your money in varied instruments that has the potential to yield high returns.
Why You Should Invest
Some people just save it on banks in the fear of losing money with investments. While this is a traditional and safe option, this will not likely increase your financial worth. If you invest your money wisely, the potential to maximize your profit is higher than refusing to invest at all. There is always a degree of risk when investing but your investments should depend on your appetite for risk.
Generally speaking, if you are looking for huge returns, you need to take large amounts of risks as well (without losing the principal of course).There are different investment options out that can increase your investment income without worrying if your money will vanish in mid-air.
Here are your options on where to put your money for best returns:
- Mutual Funds or UITs. These income funds are invested in a diverse range of instruments such as mortgages, secured loans, bonds, and utility stocks. These income-producing instruments are professionally managed and are a combination of different forms of securities that can generate high yield with lesser risks involved. Some funds are conservative while some are aggressive. You can also try out exchange-traded funds which are similar to UITs but they behave like stocks which can be traded or sold daily. There is always a degree of risk with any type of funds like income funds which offer reinvestments risks, market risks, purchasing power risks, and task risks.
- Fixed Annuities. These investment vehicles specifically cater to conservative investors or savers who are looking for higher returns while keeping the principal intact. This is designed to allow investors to build money and let grow while being tax-deferred until you reach retirement. The principal and interest in this instrument is backed by life insurance companies. Look for carriers that offer high interest rates to increase your revenue over time. There are also some fixed annuities that give their investors a percentage of the debt returns or equity markets while still guaranteeing the principal amount. This is also guaranteed tax-deferred and with 10% penalty for withdrawals made before the age of retirement. The only risk seen in this investment is liquidity risk.
- Preferred Stock. This is a security that can be traded like stock but behaves like stock. This has a dividend rate of 2% or typically at $25 per share. This has very little risk for liquidity and can be sold at any given time without incurring penalties. This usually pays monthly or quarterly.
Costs does matter a lot with any investment maneuvers that you partake with. It’s not a guessing game because there really is a difference between professionally-managed funds from money that is managed by amateurs. This is enough reason to believe that investing does require skill. Those who choose to invest conservatively have been frustrated because of the low interest rates which means it practically generate nothing. While the rates may rise at some point, these guaranteed or low-risk instruments cannot beat inflation.