The word “investing” may stir up ideas of famous stock exchanges, forex, cryptocurrencies, or maybe you think it’s meant solely for wealthy people or those who have reached an extra mile in their career compared to you.
While this is not far-fetched from the truth, investment options go way beyond stocks. When investments are made responsibly, they are accessible to anyone regardless of their career, age, or income.
Investing is a means to grow your money and beat inflation. Although investments come in numerous forms, here are the best five investments that you can make in life:
Own Home
There are many good reasons why you must invest in real estate, and though it may seem to be a wrong move for some investors— it is, in fact, a very smart move to invest in your own home.
The reason for this is very simple— everybody needs a house to live in. Owning a home is a big advantage, given that a residential property is an asset class. Like the stock market, real estate has its ups and downs, but houses are always in the baseline demand at the end of the day. People don’t always need a Microsoft share, but they do need a place to rest and sleep.
Owning a real estate property makes you a long-term investor. Come to think of it; once you have your own house, you would probably live there for a long time. This only means that you will be holding this asset for a reasonable time until the price goes higher and higher in value.
The best thing about owning a real estate property is its strong performance record. If you hold a property for a very long period of time, you will be able to sell it more than what you paid, even while including the closing cost.
This is why investing in your own home is probably one of the best investments you can make in your entire life. It would seem as if you were not really investing at all because you’re enjoying the perks of having your own house.
Peter Lynch, one of the world’s famous investors, said in one of his books One Up on Wall Street that before you go chucking your money in the stock market, you need to buy a house first.
A home to live in is a single average investment that even the average member of society can afford.
Skills and Knowledge
This might sound to cliche, but this is absolutely an excellent investment to bet your money in.
Most people today don’t know how to buy stocks. Most people don’t know how to buy investment properties. Most people don’t run their own businesses. Instead, people today have a job that they work hard for 40 years and so, just to be able to afford living and retirement.
Unfortunately, many people stopped learning once they graduate from a university. After getting the qualification they want for a job, they look for a job and then become comfortable with it.
However, if you’re really motivated, you should learn how to spend your time and even money to be an expert in what you do, and it will pay really good returns. If you’re working full-time, the goal is to make yourself the most desirable employee as much as possible. Hence, more opportunities will open up for you.
For instance, both you and one of your colleagues get into marketing. Your colleague only got a diploma from the marketing degree, and during his spare time, he only watches Netflix, plays online games. On the other hand, you who also have a marketing degree diploma continue, and in your free time, you do courses to expand your knowledge and skill set related to your job.
Now, if an opportunity for the Head Marketing position comes in, who do you think will land the job? Of course, the one who can crush the interview with a varied skillset and in-depth knowledge.
Possessing a wide array of knowledge and specializing in your competence would lead you to numerous opportunities, and of course, more money.
Continue to invest in yourself— this might sound too cheesy, but this is truly a good way to pave the way to a much higher income.
Market Tracking ETF
An exchange-traded fund (ETF) is a basket full of securities that, just like stocks, trades on an exchange. ETFs are consisting of different types of investments like commodities, bonds, stocks, and a mixture of different investment types. An exchange-traded fund is a type of marketable security.
The biggest EFT worldwide is SPY, known as the SPDR S&P 500 trust. Owning S&P 500 means holding a portion of around 500 largest companies in America.
This is one of the best stakes a person could start with because this is where you get into a market without concerning yourself too much in the fluctuations in price. You can hold it for about 40 years, and you’ll get a good chance of significant returns.
S&P 500 goes up to 8% annually since taking on 500 stocks into their index. In Australia, S&P investors are able to get an upward 10% every year for the past ten decades.
ETFs don’t require you to have a high IQ in order to invest. You don’t need to study complicated bar charts nor invest in individual companies— all you have to do is just participate in the stock market.
In investing in ETFs, you can just put your money in the market and trust that it will give big returns in the long run.
An initial investment of $5000 turns to around $75,000 with 7% per annum returns in 40 years.
If you put up $5000 every year for 40 years, you will have a total deposit of $200,000, and that portfolio could actually have approximately $1,000,000 after 40 years.
Learn Value Investing
Value investing teaches us to invest in stocks not because of their price but because of the “value” that the company offers. Value investing pays more attention to the worth the company will bring. In short, value investing instructs people on how to buy high-quality businesses.
Moreover, along with quality, value investing includes buying companies with a low risk of bankruptcy and stocks with a steep discount on intrinsic value. Doing this is not far from reality to achieve 15% annually through value investing, opposing the 7% from passive investing.
However, although value investing isn’t too hard intellectually, it takes a toll emotionally. The emotional toll is the reason why only a few people can do it well.
Value investors should block out their emotions, get rid of the thought of getting left out, avoid getting influenced by the media and succumb to various news opinions. This is hard for the majority of people, and only a few people can do that.
Start A Business
Starting a business is not smooth sailing— even big businesses ended up failing.
There will be no such thing as weekdays, weekends, and holidays when you run a business. There will be no such thing as done for the day. You can only say you’re fully done when the task that needs to be completed gets accomplished. There will be times when everything feels wrong in your business.
Yet, if you’re driven, competitive, the type of person who always tries to progress and keeps looking forward to the “next big thing,” starting a business may be suited for you.
If you really want to start a business, pick something that you badly want. So, you will have the drive to get through the toughest times.
If a business you put up succeed, there will be enormous profit, and the earning possibility will be endless.
