Investing in stocks and bonds often seems like something only rich people do. Where does one even get started? Those who have studied economics may understand how the stock market works, but what about the individuals who have chosen a different career path? Where do you get started? And how do you know which investments are likely to pay off?
Let’s take a look at some of the best investments you can make at any age.
High-Yield Savings Accounts
Savings accounts, whether online or in a traditional bank, are a great way to save money in the short term. If you are looking to save up for a trip or a specific purchase, they are a great way to ensure you don’t spend the money you have allocated for this purpose.
Online savings accounts tend to have better yields, as these lenders have lower overheads than traditional banks. Make sure you do your research thoroughly and check what the best savings accounts available to you are, but don’t compromise on safety. You want to work with a reputable agency.
Dividend Stocks
Dividends are regular payments companies pay to their shareholders. They are often associated with profitable, large, famous companies most people have likely heard of. In fact, the best dividend stocks are from companies that have often been in business for decades, even centuries.
Share prices can rise and fall depending on the market and how the company is doing at a given time. Still, they are considered a safe and prudent investment and can bring in a large second income.
Choose dividend stocks from companies that report consistent growth. They may not look like much at the moment, but as long as the trend continues, they can yield significantly in a couple of years’ time.
Individual Stocks
Stocks are a share of ownership in a certain company. They offer a huge potential return, but they are also accompanied by a hefty risk.
Don’t be afraid to invest in them, though. Your goal is to balance out your portfolio. You want both blue-chip stocks that are practically guaranteed to bring in a return and some more volatile stocks that may or may not win you big.
You can easily find a good broker who will help you make sense of what is profitable and what may be risky.
Government Bonds
Government bonds are a loan from you to the government. They pay interest over a period of time, from one year up to 30 years. They provide a steady stream of income and are thus considered a very safe, fixed-income security.
These bonds are practically risk-free, as they are guaranteed by the government. The downside is that the return is not as high as with some other types of investments, so you can’t expect to earn big. But if you want a steady, safe investment, they are a great choice.
Corporate Bonds
Corporate bonds work just like government bonds, but you are loaning money to a company, not the government. This makes it a slightly riskier option, as you don’t know if the company will be able to pay your interest.
However, high-yield bonds can turn out to be quite profitable if you don’t mind the risk. Note that there is a delicate balance involved: the likelier the company will go out of business, the higher the yield. Companies that run a stable operation usually sell bonds with a much lower yield, as they already have a steady revenue stream.
A Word of Caution
When investing, make sure you are well aware of any potential risks involved. While some investments practically guarantee a return, it will often be lower than the yield that comes with more volatile stocks or bonds.
Always diversify your investments and be ready to lose. Never invest an amount of money you can’t survive without, and keep track of your investments. It’s always better to pull out while you are ahead than to risk losing a significant amount if you stay too long.
Wrapping Up
Finding a reliable advisor before you make any investment is definitely the wisest way to go about it. Along with that, make sure to read up on the topic and educate yourself as much as you can. With a good advisor and plenty of research under your belt, you’ll be ready to take on the challenge of investing and make smart decisions.