5+2 Best Ways To Invest Money Safely

The 7 best ways to invest money safely are:

1. The Stock Market

2. Real Estate

3. Mutual Funds

4. Retirement Funds

5. Cryptocurrencies

6. Bonds And Securities

7. Savings Accounts

What are the best ways to invest money wisely? It's a question many people ask themselves but few know the answer to! In short, there are lots of ways that could be deemed great options for investing, but it really depends on what you’re looking for from your investment. A lot of people think that investing money is about finding the highest return. But it's not. It's actually about making sure your money earns a good enough return to keep up with inflation, but doesn't take on too much risk in doing so.

Investing your money is a smart move for those that have extra money sitting in savings accounts, as if you do it right, you’ll end up with a lot more money than what you usually get from saving account interest. 

If you’re new to investing, you’ll want to know how to invest money wisely, preferably with safe investments with high returns. In this article, we’ll explore the different methods of investing, which are best for beginners, and give you some tips to make your investments go further! Whether you want to turn dimes into dollars or grow four digits into six, there’s a way that investing can help- here’s how to invest money wisely!

The Stock Market

Stocks are ‘shares’ of ownership in a particular company. If you buy stocks from a company, it means that you own a portion of it - meaning you profit when the company profits, and your stocks grow when the company grows in value, too. Investing in the stock market is one of the best ways to invest money for those who are willing to learn the ropes! Thanks to the internet, you can easily invest in individual stocks and you don’t need to invest thousands of dollars to get going.

In the past, stockbrokers would charge several dollars worth of commission every time you bought or sold stock, which made it harder to invest in single stocks with little amounts of money. Now, however, you can find lower commission rates and even 0% commission! This means that you only need as little as $1 to start investing in individual stocks, although you might find the higher you invest the more you get back. Investing in small amounts is ideal for beginners, as you can learn how to invest properly without much risk.

Once you’ve familiarized yourself with the stock market and how it works, you can slowly start building up the amounts you’re willing to invest - but always be cautious, as investing in stocks always has some form of risk. Since your stocks mean that you own shares of a company, it also means that if that company decreases in value, so do your shares. So if you invest in a company that then takes a dive in value, stocks you bought for $50 may end up decreasing in value to prices as low as $5.

Also read: 12 Best Finance Podcasts For Your Savings

Real Estate

Investing in real estate is one of the best ways to invest your money because it provides you with a number of benefits. It's an excellent way for building up equity and gaining wealth, while also providing tax advantages that stocks don't offer. You can deduct depreciation from income taxes or grow capital gains exclusions on profits as long as certain conditions have been met.

If you’re looking where to invest money to get good returns without spending a lot, crowd-funded real estate is a good option. The only thing that might put some individuals off this type of investment is the risk involved and the length of time it takes to find a property. It can take a while before you find a property that has a clear margin of safety for investing, so if you’re looking for a quick way to increase your funds, real estate might not be the best option.

You can also look at flipping houses, for profits. To do this, you’ll have to buy a property (or get a mortgage if you’re confident you can sell the house for more) that needs renovation work, spend the time and money to renovate the house, and then sell it on for more money. If the current real estate market isn’t looking like you could make a profit by reselling a property, you could choose to rent or lease the property instead. This is a great way of receiving steady amounts of money, and well worth the investment if you can afford it! 

Also read: How To Manage Personal Finances

Mutual Funds

Want to know where to invest money to get good returns? The answer is mutual funds! A mutual fund is a pool of money from stocks and other bonds created by multiple companies, investors, and organizations. These types of investments are great to dive into if you’re looking for a long-haul investment with little to no work involved.

Mutual funds are diversified funds and are usually taken care of by a professional investment manager, so you won’t have to learn how to trade or spend time on research. Best of all, these are low-cost - you can easily buy and sell without paying broker fees or commissions! Mutual funds are one of the best ways to invest money as they’re so diverse. These types of funds contain mixtures of treasury bills, bonds, stocks, and other investments which makes the risk of losing everything a lot lower than if you invested in one singular stock or bond.

A nice diverse mix of investments makes it so that there’s no individual stock that could ruin your portfolio if a crash happens. You can find plenty of mutual fund investment opportunities on the cheap, too, with some as little as $25 a month!

Also read: How Long Can an Employer Hold Your Check After Termination

Retirement Funds

There are two main types of retirement accounts that you can choose to invest in: a 401K and an IRA. Depending on what your retirement account is invested in, the risk and reward of this type of investment can vary.

Traditional 401K

A 401K is a retirement account offered by your employer that will take a portion of your paycheck and automatically invest it until you’re ready for retirement. The benefit of a 401K is that your employer will also put a portion of their earnings into your account. This amount can vary depending on what your employer sees fit, however, some employers will actually match your contributions!

You can check how much your and your employer contributions are by looking at your paystubs - it should be under your wage deductions. Don’t worry about this money being taxed, though, as it will be deferred to income taxes! There is a limit to how much you can invest in your 401K per year, which is $18,500. If you can, aim to max out your 401K each year to get the most out of your account.

IRAs

An IRA is an individual retirement account you can set up yourself, and so doesn’t have anything to do with your employer. A traditional IRA is tax-deferred, while a Roth IRA is completely tax-free - so when it’s finally time to withdraw your funds at retirement you won’t be taxed on the income from your investments.

Both kinds of IRAs can be safe investments with high returns and little risk, as you have a lot more control regarding where your money is being invested than with the 401K. You can choose to invest your IRA account money in bonds, mutual funds, and even individual stocks!

Also read: Freelancing As A College Student

Cryptocurrencies

Cryptocurrencies such as Bitcoin and Dogecoin are extremely popular in 21st century investing. If you’re unfamiliar with cryptocurrencies, they are unregulated digital currencies that you can buy and sell online. These types of investments have gained a huge following over the most recent years for their ease of use, however, they remain a potentially risky investment - this is because there is a major risk that cryptocurrency will never progress as a widely accepted form of payment.

Cryptocurrency investments are attractive to many people as you can easily buy and sell them at the right times to make profits. The price goes up and down at all times, so you can make some really good investments if you know when or where to buy it from. Investing in cryptocurrencies like Bitcoin, Ethereum, Litecoin will always be an exciting investment opportunity for people who are looking for quick returns on their investments or want to diversify into new asset classes without investing too much of their net worth as well.

Bonds And Securities

Investing in bonds and securities is a great way to invest money, with some of the benefits being that they are easy to access at any time and are pretty low-risk. Bonds can be purchased from the US government, state and city governments, or from individual companies, while mortgage-backed securities are another type of bond that works by lending your money to a bank or government institution. 

The bond market has been around since the 19th century and provides people who are looking for something more than just stocks an opportunity to make their investments. Similar to savings accounts, bonds work by loaning money to another corporation or entity for a certain amount of time with a certain interest rate. One of the many advantages is how easily accessible they'll be when you need them. They will always be on hand should your need money unexpectedly; whereas stocks are not immediately available as they take days or weeks before getting back into circulation.

The government bond market is one of the best ways to invest money because it can provide you with steady returns and are arguably the safest way to invest your money - this is because the only chance of not getting your money back is if the issuer defaults. Corporate bonds, however, are slightly riskier, as you will not receive any ownership rights like you would when investing stocks and shares, so you are essentially loaning your money out like a bank lender.

Savings Accounts 

If you’re looking for something safe and short-term to invest your money into, try a savings account. Most people save money with their regular bank, but you could find higher interest ratings if you shop around and do your research! With the rise of online banks, interest rates on savings accounts are much more competitive, so you should find some great rates. Another plus is that you can pick and choose when to withdraw your money, and there are no limitations on what you can use your money for. When comparing savings accounts, you need to understand the differences between APY and interest rates. The APY (Annual Percentage Yield) includes the effect of compounding interest over a year, giving you a clearer picture of your actual earnings compared to the simple interest rate.

Most savings accounts will let you set up direct debits and automatic payments, so when your wage comes in a portion will go straight into your savings like with a 401K.

Things To Know Before Investing

Before you decide on investing your hard-earned money or savings, you should be aware of your needs and wants. Ask yourself what you really need before making financial decisions so you can invest smarter!

It doesn't make sense for someone who lives comfortably to put their money into savings accounts or bonds that generate little interest. On the other hand, if you live paycheck to paycheck on a tight budget, it makes sense to take any opportunities for higher returns. You should also think about your situation and the level of risk involved in your investments. If you’re struggling for cash, you may think a high return investment is the best idea to make regardless of the risk - but remember, there’s a chance you could lose your money!

Conclusion

Now that you know a bit more about investing, you should be able to work out which ways are best for you and your circumstances so you can start investing your money the smart way! If you want to learn more about investing and what you can do with your money, there are plenty of personal finance books you can read - some even go through all the different types of investments so you can become an expert in the field!

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