Investing Your Money: What Are the Options?

If you have disposable income left over at the end of every month or you’ve built up a sizeable savings fund, you might be looking for ways to grow your capital. For many people, investing is a viable way to achieve their financial goals. From gradual incremental rises to sharp peaks and rapid growth, there are a variety of investment strategies that can offer impressive returns. 

Of course, investments carry a risk too, which is why it’s important to understand what the options are before you begin investing your funds. By identifying the pros and cons and assessing the level of risk you’re comfortable with, you can find the right investments to suit your needs. To get a better idea of how you can use your funds to try and protect your financial future, take a look at these popular investment options now:

1. Savings Account

A savings account might not sound like the most exciting form of investment, but it can be one of the safest ways to secure your funds. When you choose to open an account with a bank or financial institution that’s backed by the Canada Deposit Insurance Corporation, up to $100,000 is secured. This means that if the institution were to fail, you would be able to recoup your savings, up to the limit amount. 

Due to this, savings accounts are about as low risk as it gets when it comes to investment. While this makes them a popular option for people who are wary of risking their funds, it does mean that the returns may not be as high as you’d like. With a high-interest savings account, however, you can benefit from rates as high as 1-1.5%, which isn’t a negligible amount. 

2. Playing the Stock Market

Most people are aware that the stock market is a prime investment opportunity, but a significant number of people aren’t really sure how it works or how you go about buying shares. While you could spend years discovering everything there is to know about the stock market, you don’t have to be an expert in order to make a profit from buying stocks. 

When you purchase publicly traded stocks, you’re essentially buying a small piece of a large company. If the company performs well, the value of your stocks should increase and, if you decide to sell them, you can make a profit. Conversely, if the company performs badly, the value of your stocks can decrease. At this point, you could decide to sell them at a loss or hang on to them and hope that their value rises in the future. 

As stock ownership is open-ended, it can be a viable way to make significant returns. Providing you can sell when prices are high and ride out dips in the market, you might be surprised at how much you can make. 

If you think the stock market might be the right investment opportunity for you, take a look at this post from Wealthsimple and learn to buy stocks quickly and easily. With automated investing options, commission-free trading and no account minimums, Wealthsimple makes the stock market accessible for everyone who wants to explore this type of investing. 

3. Real Estate

If you have a mortgage or purchased your home outright, you’re already a property investor! However, buying a second property could be a viable way to use your funds to accumulate wealth and grow your capital. Of course, the success of this type of investment depends on the value of the property rising, rather than falling. 

There are numerous ways to approach a real estate investment. You can buy when the property market is low and hope that it increases again before selling, for example. Similarly, you can purchase property in an area that’s due to be redeveloped, in the hope that gentrification will have a positive impact on property values. 

Alternatively, you might decide to buy a property that’s in a state of disrepair and renovate it to add value to it. However, you will need to incorporate the cost of renovations into your plans to determine whether it’s a viable investment. In addition to this, you could decide to purchase land and build on it, before selling the completed property at market value. 

As well as increasing your capital, you can also generate income via a property investment. If you purchase a residential or commercial property and rent it out, for example, the monthly income can be classed as a return. 

Unless you have a significant amount to invest, you may need to secure funding if you want to invest in property in this way. With a buy-to-let mortgage, however, you could establish yourself as a property investor or developer and begin building up your portfolio. 

4. Spread Betting

Spread betting involves the stock market but it doesn’t require you to buy and sell stocks or shares. Instead, you bet on whether the value of a share, class or market, such as FOREX, will rise or fall. If the shares of ABC Inc. are valued at $1.50, for example, you might want to bet $10 for every .1 that they increase. If the value rises to $1.90, that’s an increase of 0.4, which would net you a return of $40, minus any fees. 

However, it’s important to be aware that you can incur significant costs when spread betting. If you bet $10 that the value of ABC Inc. shares will increase by .1, but they actually decrease to $1.10, that’s a drop of 0.4, which means you would owe $40, plus any fees. 

As you can see, profits and losses can accumulate quickly via spread betting. While it is possible to make significant returns, it’s vital to understand the risks before you begin investing your funds. Similarly, you’ll want to ensure that you choose a platform that enables you to set loss limits, so that you can minimise potential losses. 

Although spread betting carries a high level of risk, it can be a fun way to invest, providing you do your research and get to know the markets first. 

5. Cryptocurrency

There has been a lot of press about cryptocurrency in recent months, particularly since Bitcoin reached record highs earlier in the year. As digital currencies become more mainstream, they’re attracting more investors. In fact, you’ll find that many major brokers and trading platforms now allow users to buy and sell digital currencies, as well as other assets. 

Again, cryptocurrency is highly volatile, which makes it a high-risk investment. As the value of a coin can change swiftly, you stand to make high returns but, conversely, you could suffer serious losses too. Despite this, crypto is becoming a popular investment option for millions of people. With thousands of coins to choose from, you could invest in a well-established digital currency, such as Bitcoin or Litecoin, or opt for something newer, like Ethereum or EOS. 

When investing in crypto it is also useful to know limit order which is a type of order that lets you direct your exchange to buy/sell a coin at a specific price.

If you’re going to invest in crypto, however, you’ll need to find a cryptocurrency exchange that you’re comfortable using and set up a crypto wallet. This allows you to hold your investment securely, so it’s vital that you do your research to find the most convenient and reliable wallet for your needs. 

6. Bonds

When a company or organisation wants to raise money, they can do so by issuing bonds. Essentially, investors buy bonds and the organisation selling the bonds agrees to pay the money back on a set date, along with interest at set intervals. Here, the investor is acting as the lender to the company or organisation and generating returns via the interest the borrower pays. 

Bonds are a popular investment option but there are many different types. Secured bonds offer collateral if the borrower is unable to repay the bond, for example, whereas unsecured bonds carry a higher risk to the investor. 

If you decide to invest in bonds, you’ll be able to choose whether to invest in short, medium or long-term agreements. However, you will need to be prepared to tie your money up for a significant period of time if you want to invest in a long-term bond. Of course, if interest rates fall during this time and the borrower wants to repay the debt early, this can mean that you miss out on interest payments, which can limit your returns. 

Are You Ready to Start Investing?

With so many investment options out there, it’s easy to see why people get confused about what type of investment is right for them. There are thousands of companies listed on major stock markets all over the world, thousands of cryptocurrencies and a variety of different bonds and savings accounts to choose from. In addition to this, you’ll find that there are other types of investment you might want to consider too, such as EFTs or CDs. 

If you’re feeling overwhelmed, there’s no need to worry. Fortunately, there is plenty of help available for new and experienced investors alike. By seeking advice or hiring an investment manager, for example, you can determine what types of investments are best suited to your financial situation and your level of risk tolerance.