When people hear about putting their money to work, they tend to feel overwhelmed about where and how to put their money to work. Everyone knows about the stock market and bonds for the most part, but how exactly can you do that and what are the best ways to invest money in the markets? In this article, I will lay out eighteen different ways that you can put your money to work, from the informed investor to the beginner. There is one aspect of all of them that are the same, and that is staying informed about what you are invested in. The more advanced methods obviously take much more time, but be aware that you should spend at least an hour a week reading up on the financial news relevant to your investment.
This is considered to be the more advanced way to make money and deemed fit for experienced players in the market. In an option, you buy a contract either going long (betting that it will go up in value) or shorting the asset you are betting on (betting that it will decline in value). You can make a lot more money this way than buy simply buying and selling stocks, but you can also lose more money than you put in, which scares a lot of people away from this type of investing.
We have put together a Beginner’s Guide To Options Trading, click here.
Trading futures can be fairly complicated, but in reality, it is very simple. When you buy a future, you are buying a share of whatever it is you want to buy for a specific price, but you aren’t buying until a specified date down the road. This can become very lucrative if you buy the asset at a lower price than it will actually be on that date, saving the buyer a lot of money. This is one of the more complicated ways to invest and shouldn’t be done until you fully understand the methods.
If you begin to trade forex, the goal is for you to buy a currency that will gain value compared to another currency. For example, if you are an American and you believe that the value of the US Dollar will decline over the next few months, you would want to buy another currency that is expected to gain value compared to the US Dollar. You can get into trading forex more expertly to where you are buying currencies that are expected to have a high jump in value due to different market conditions and then selling that currency into another currency.
An index fund helps to lower your exposure to volatility and keeps your money a little safer at times. Many index funds track the market, such as the Dow Jones industrial average or the S&P 500. These funds tend to have a steady increase in value over the long term and make up many peoples retirement funds.
Mutual funds are funded by the investors, so if you wanted to put your money into a mutual fund, they would put that money into stocks, bonds, ETF’s, etc, according to what the professional money managers at these funds deem fit for the market at the time. From there, everyone’s money in the mutual fund is pooled together so everyone receives the same rate of return. These funds are highly competitive and can bring in returns that beat the market average for that year.
ETF’s are a great way to diversify your portfolio and protect yourself from the volatility of owning a certain stock. An ETF is a fund that tracks a like-minded group of assets in most cases, so that if one stock drops significantly, the others in the fund can keep the value of the fund up. There are also ETF’s that track different aspects in the market, such as the volatility reading, a commodity, or even the different markets like China.
Day trading is exactly what it sounds like. To be a day trader, you will never own a stock overnight. There are many methods to day trading, but in short, in the morning you would find a stock or stocks that should jump in value, due to good news or even just from high volatility. You would sell later in the day or even a few minutes after you buy to make a handsome profit. Many day traders use large sums of money so that a small percentage jump translates into high dollar changes.
IPO – Initial Public Offering
IPO’s are very exciting because it is the first time that a particular company is traded in the market. Many times, as in the case of ROKU a couple of months ago, the stock soars many times its value on the day of the IPO. In some cases it can be stagnant or even decline if the excitement isn’t there, but with the recent decline in the number of IPO’s per year, the excitement over a new stock usually drives most IPO’s up during the first few days.
A penny stock is a stock that trades for below $5, making the market cap very low compared to an IBM or Walmart. These stocks can make huge jumps in value in a very short time with the news of a partnership, acquisition, or in some cases just good news. Over time, many penny stocks can cost you a lot of money, but if you can buy the right one at the right time, you can sometimes double your money in one trading day.
Our favorite Penny Stock Advisory program is the Seven Figure Formula, click here to learn more.
Closed End Funds
A closed end fund is a mutual fund that isn’t always open to new investors, or even to existing investors to leave the fund. This is usually for a high end fund that has had a great track record or great people running the fund. The advantage of this fund is that even the market goes down and people freak out, they cannot take their money out. When they can’t take their money out, the managers can do their work and move funds around into different avenues that will bring the fund back or even surpass where it previously was. When money isn’t taken out, money can be put to work to take advantage of the dip instead of just losing money, which attracts many high dollar investors.
Microcaps are small companies with a market value between $50 and $300 million dollars. Many of these companies are small businesses that needed to raise money by going public. The advantages to these companies can be great when you find a company that will grow into a huge company, taking advantage of the long term investment in them. Another way to make quick money from them is to play their volatility when good or bad news comes out about them, or even if they get acquired by a bigger company, which shoots their price up.
For Microcap stocks, we really like Microcap X Advisory, click here.
Bonds are a great way to receive income on a recurring basis and protect your investment in a very conservative way. Many people retire holding onto a lot of bonds so that they still receive a “paycheck” from the dividend that it brings. Over the long term, bonds barely beat the average inflation rate, meaning that it grows at a very slow pace. For someone looking for higher returns, bonds may not be for you, but for the person looking for steady income and low risk, bonds are perfect.
Money market funds use your money to use as loans so that you can make interest on the loan. This is another diversified way to protect you from the ups and downs of the market when you can rely on someone to pay their loan.
A 401k account is a fantastic way to set up your retirement savings. This account is not taxed until you take it out of the account, most times when you retire and is taxed at a lower rate than many other types of accounts. Your employer sets this account up for you and can sometimes offer to match what you put into it each year by a certain percentage, adding to your account even more.
If you cannot get a 401k from your employer, you can set up an IRA which is an individual retirement account. This is also taxed at a lower rate and over the long term can help set you up for success in retirement with the tax perks.
A Roth IRA account is a retirement account that lets you invest money into the account, after taxes. The advantage to putting money in after taxes is that if you wait to take money out of this account until you are at least 59 ½, you aren’t taxed on the withdraw at all. This is the major choice of people who plan to work later in life and do not have a 401k available to them.
Cryptocurrencies are the latest craze in the investment community, and to go in depth into it in this short article will not do it any justice. In short, you can buy the cryptocurrencies when they dip down and then sell when they rise back up, using the high volatility to your advantage, or you can find a high quality cryptocurrency, but as much as you want, and wait for it to multiply in value over time. Many of these cryptocurrencies have seen percentage gains into the thousands in only a matter of a year, so finding a coin that hasn’t taken that leap yet, or even buying one that has and is still looking like a promising investment can help your bank account multiply, not just grow.
Initial Coin Offerings (ICOs)