How to Invest Money

When figuring out how to invest money, it’s best to start with the basics. I’m sure
any financial advisor will agree with me.
These basics include setting the goal of your investments and determining where
to invest money to best achieve each goal.
Investing Money for Beginners
When you invest money, what you are doing is either buying a portion of a
company or a commodity with the belief that the value of that company or
commodity will grow over time.
Don’t forget:
Investing is not a get-rich-quick scheme, but rather a way to consistently grow the
wealth you already have. The good news is that even though investing is a way to
grow your wealth, you don’t have to have a lot of money to get started.
Where Should I Invest Money?
When deciding where you should invest your money, you’ve got plenty of
options. These options include:
1. The Stock Market
The most common and arguably most beneficial place for an investor to put their
money is into the stock market.
When you buy a stock, you will then own a small portion of the company you
bought into.
When the company profits, they may pay you a portion of those profits in
dividends based on how many shares of stock you own.
When the value of the company grows over time, so do the price of the shares
you own, meaning that you can sell them at a later date for a profit.
Other investment options include:
2. Investment Bonds
When you purchase a bond, you are essentially loaning money to either a
company or the government (for US investors, this is typically the US government,
though you can buy foreign bonds as well).
The government or company selling you the bond will then pay you interest on
the “loan” over the duration of the bond’s lifecycle.
Bonds are typically considered ‘less risky’ than stocks, however, their potential for
returns is much lower as well.
3. Savings Accounts
By far, the least risky way (and probably the worst way) to invest your money is to
put it in a savings account and allow it to collect interest.
However, as is usually the case, low risk means low returns. The risk when putting
your money into a savings account is negligible, and typically, there are little to no
returns. Still, savings accounts play a role in investing as they allow you to
stockpile a risk-free sum of cash that you can use to purchase other investments
or use in emergencies so you don’t touch your other investments.
4. Physical Commodities
Physical commodities are investments that you physically own, such as gold or
silver. These physical commodities often serve as a safeguard against hard
economic times.