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The Various Ways To Invest Your Money

There are many ways in which you can invest your money. However, many do not know how to diversify their money to invest.

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The Various Ways To Invest Your Money
Currency Junkie

Investing is necessary to make sure you have enough money to retire and still live well. There are several different ways in which an individual can invest their money. You can decide to either invest your money conservatively, moderately, or aggressively. How you invest your money is a personal decision and may very well depend on your stage of life. If one decides to invest their money conservatively it is low risk and has a low potential for return. If one decides to invest their money moderately it is a moderate risk and has a moderate potential for return. And as one would expect, if one decides to invest their money aggressively, one will have to take higher risks with the ability to have a higher potential return.

If an individual decides to invest their money conservatively than they are most likely to invest their money into certificates of deposits (CDs), government bonds, and U.S. stocks.

  • Certificate of deposits (CDs) are savings certificates that entitle an individual to receive interest on the money that you’ve decided to put in the CD. The CD has a maturity date with a fixed interest rate, that can’t be changed. And CDs are issued usually by commercial banks and are insured by the Federal Deposit Insurance Corporation (FDIC). In other words, CDs are purchased from banks you’re your money and it stays in that savings certificate until the maturity date, when an individual can collect their money invested plus interest. However, usually with CDs an individual usually cannot withdraw their deposit whenever they would like, and in cases where you are allowed to withdraw then you would have to pay a penalty fee and not be able to receive the full amount of money you originally invested.
  • Government bonds are a loan security issued by a government to support government spending, which includes paying for repairing roads, educational resources for children, and paying federal agents who protect the people. Federal government bonds in the United States include savings bonds, Treasury bonds, and Treasury inflation-securities (TIPS, these provide protection against inflation).
  • U.S. stocks are coupled with the Federal Reserve’s decision to raise interest rates. An individual can invest in different stocks from various companies, such as Apple, Google, and Nike. You just have to decide which companies you would like to invest in, and evaluate which stocks would most likely give you the most returns depending on history and recent news about the company.
  • An individual would be able to invest in real estate by putting aside money to purchase a mortgage, which then one can use the newly purchased property as a rental and gain extra profit. Or one would be able to purchase the house and hopefully resell it for a greater value in the future.
  • In general, bonds are just like government bonds, however, corporations can offer them too. So, you can invest in a company’s new project and earn payment back on the money invested at either a variable of fixed interest rate depending on who you invest with.
  • Someone who invests in precious metals usually purchases gold, silver, and platinum. Gold is known not only for being used in expensive jewelry, but it’s also durable and able to conduct heat and electricity very well making it very desirable to use in making user electronics. It’s one of the most desirable metals to be invested in. Silver is an industrial metal and also is worth great value. Platinum, unlike gold and silver, is a much rarer metal to find, but the market of platinum is unpredictable. This is because platinum is in rare supply but it is worth a greater value than gold.

A conservative investor is most likely to allocate their money towards 25% CDs, 50% government bonds, and 25% U.S. stocks.

If an individual decides to invest their money moderately than they are most likely to invest their money in large and small U.S. stocks, real estate, bonds, precious metals, and CDs.

  • An individual would be able to invest in real estate by putting aside money to purchase a mortgage, which then one can use the newly purchased property as a rental and gain extra profit. Or one would be able to purchase the house and hopefully resell it for a greater value in the future.
  • In general bonds, are just like government bonds, however, corporations can offer them too. So, you can invest in a company’s new project and earn payment back on the money invested at either a variable of fixed interest rate depending on who you invest with.
  • Someone who invests in precious metals usually purchases gold, silver, and platinum. Gold is known not only for being used in expensive jewelry, but it’s also durable and able to conduct heat and electricity very well making it very desirable to use in making user electronics. It’s one of the most desirable metals to be invested in. Silver is an industrial metal and also is worth great value. Platinum, unlike gold and silver is a much rarer metal to find, but the market of platinum is unpredictable. This is because platinum is in rare supply but it is worth a greater value than gold.

A moderate investor is most likely to allocate their money towards 20% large U.S. stocks, 20% small U.S. stocks, 20% real estate, 20% bonds, 10% precious metals, and 10% CDs.

If an individual decides to invest their money aggressively than they are most likely to invest their money in small U.S. stocks, real estate, CDs, and stocks of developing countries. When someone decides to purchase stocks of developing countries, the majority of people invest in a group of nations referred to as BRICs (BRIC consists of Brazil, Russia, India, and China). These four countries are the countries abroad, which many invest their money in because they are all predicted to have a greater impact on the world economy within the next decade. An aggressive investor is most likely to allocate their money towards 40% small U.S. stocks, 30% real estate, 20% stocks of developing countries, and 10% CDs.

Now that you see the different ways to invest your money, you might ask yourself which tactic you should be using. An individual usually decides to invest their money depending on their stage of life. These stages of life include early stage of career, middle stage of career, and when an individual begins retirement. The investing of money depending on your stage of life correlates with what kind of investor you are. If you are at the early stage of your career than you are most likely to invest at a high risk with high potential return (you are most likely to invest aggressively). If you are at the middle stage of your career than you are most likely to invest at a moderate risk with moderate potential return (you are most likely to invest moderately). If you are at the age when you are about to retire than you are most likely to invest at a low risk with a low potential return (you are most likely to invest conservatively).

If an individual decides to invest at the early stage of their career than they are most likely to invest their money in small and large stocks, corporate bonds, and money market securities. Money market securities include CDs and treasury bills which I have elaborated on earlier. An individual that is at the early stage of their career are most likely to allocate their money towards 20% small stocks, 40% large stocks, 20% corporate bonds, and 20% money market securities.

If an individual decides to invest at the middle stage of their career than they are most likely to invest their money in small stocks, money market securities, large stocks, treasury bonds, and corporate bonds. When a person decides to purchase a treasury bond, they have to keep in mind that the bond will take more than 10 years to mature using a fixed interest rate, however even though you have to wait to earn a return on your investment you are investing in the government. And when you invest in the government you have little to no risk of losing profit. An individual that is at the middle stage of their career are most likely to allocate their money towards 30% large stocks, 10% small stocks, 20% corporate bonds, 10% treasury bonds, and 30% money market securities.

If an individual decides to invest at the age where they are about to retire than they are most likely to invest their money in money market securities, utility company stocks, and treasury bonds. An individual that is investing when they retire are most likely to allocate their money towards 20% utility company stocks, 40% treasury bonds, and 40% money market securities.

However, remember to keep in mind that this is an ideal breakdown of investing your money. This is a rough guideline of how one should invest their money throughout life or depending on the type of investor you are. And if you are not investing your money to set aside for when you retire, YOU SHOULD BE!!

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This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
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