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When it comes to making money, you don’t always have to work for your extra funding. Rather, if you want to get smart, then you need to look at making your money work for you. That’s what investing is all about. However, rather than putting all of your eggs in one basket, or all of your money in one type of investment, it’s best to diversify. Here, we will look at some of the most common markets to invest in, and what each can offer your portfolio.
Savings
You can save money by using all kinds of bank accounts and savings funds. When it comes to increasing your fortune, it’s important to realize that the interest rates that most saving funds offer will never match the kind of gains you can make in investment markets. It’s more of a safe place to store your money than anything else.
Stocks
Stocks represent portions of ownership of a particular company. When you invest in a company, you are effectively putting money into it with the hope that it makes enough money to drive stock values up and give you a return on investment. It’s one of the most common investments out there and stocks can also pay dividends, meaning that you’re not only increasing the value of your investment, but you could be getting money back from it on a regular basis.
Forex trading
If you follow international news well, then this is one of the most accessible markets around. Forex trading is about investing in relationships between different currencies, such as whether the US dollar will rise in value compared to the Japanese Yen, for instance. It’s one of the markets with the highest potential for fast returns, but this also makes it somewhat volatile, so it might be better to have it be a smaller part of your portfolio.
Bonds
Both stocks and forex trading come with a larger degree risk than savings. Somewhere in the middle, you will find bonds, which are loans given to companies, governments, and people. The return on bonds are traditionally lower, but they also tend to be a lot more reliable than stocks and Forex. What’s more, bonds will still almost always give higher returns than savings accounts.
Real estate
Rather different from putting your money into different abstract investments, you can of course save up to buy or purchase a part of a property for the sake of investment. You can buy, improve, and flip homes, or you can buy for the purposes of renting out; each strategy has its own benefits. However, if you’re investing in real estate, then you must be prepared to put more work into seeing the returns you’re looking for.
The key benefit of investing in multiple fields is that you diversify your losses. If your stocks go down, for instance, your Forex investments might not be affected and might still continue to rise. Whereas if you had all of your money in stocks, you might feel that loss much more deeply.
