Often time, it is better to invest spare cash rather than just allowing it to lie there in the bank account. That said, with all the risks around, investing is not always easy. When a person decides to invest part of their income, many reasons can motivate this decision. Some of these things include having money for emergencies, not losing the standard of living when retirement arrives, helping children, buying a home. There is also a long list of uncertainties in this regard: if you will obtain the expected profitability, if you will be able to accumulate enough equity for the future, or rather obtain an extra income periodically, if you will lose part of the money invested.
Diversification, long-term investment, and the contracting of low-risk assets give investment security. Diversifying involves distributing your savings in different assets, since if you invest everything in a single option and it gives bad results, you run the risk of losing money. “By creating an investment portfolio with several assets, you will be reducing the risk, since, if one of them does not work as expected, you can always compensate with the good results of the other. When we talk about diversification, it is also important to diversify geographically. Investing money in different countries will also reduce the risk.
Long-term investments are also a security plus. Long-term investment will give you room to correct the movements that you are taking and, if you go through a time of uncertainty in the market, you can recover without seeing your savings affected. Thus, even if you obtain a lower return, it is easier to achieve your financial goals.
Here are a few investment options you should know of.
The stock market is a market in which marketable securities are bought and sold, such as stocks, currencies, bonds, and other more complex products. The stock market is based on the law of supply and demand. If a stock is in high demand, its price goes up. If everyone wants to sell the shares of a company and there are few interested buyers, the price of the share falls. Through the stock market, companies obtain financing and for their part, investors can become shareholders of a company.
Investing in Voluntary Pension Funds
There are two types of pension funds: the mandatory one, where you “save” for your retirement; and the volunteer, where you voluntarily enter money so that the fund manages it for you, generating profitability. Because they are pension funds, they have state protections, which makes the investment a little safer. You often do not have to pay taxes on the money if you get to withdraw up to 30% (the money is released after 10 years, or earlier). They organize your investments according to the profitability analysis of the market to ensure that you have the best return with the most moderate risk possible.
Crowdfunding, also known as collective financing, is a modality to obtain financial support that allows the development of projects. Many entrepreneurs and companies with innovative ideas turn to this source of financing because it is an alternative to traditional banking. The rewards vary according to the previous business: participation in project shares, royalties on total profits, rewards of token value, or product benefits.
While investing in crowdfunding, you basically put your projects so that other companies know about them and get investments in an agile way.
Before beginning your journey, it is always recommended that you go through some training or get someone who is a professional. You must change how you think about finances, make them part of your routine, read specialized news on the subject, consult the specialized glossary of the stock market, learn the important words, and feel comfortable with the subject.