Investing money is a great idea for individuals who are looking to earn extra money, start a financial portfolio, and save for huge milestones throughout their lives such as retirement. There are several ways to invest money, doing you research and finding out which investment is right for your situation is imperative.
You can invest your money in various ways. You must first determine how much you have to invest, the time length you can invest, and what risk you are willing to take with this money.
Certificates of Deposit, or CD’s, are a great, safe way to invest money. CD’s can be purchased through your bank; you are essentially lending money to your bank. The bank will sell you a CD, use the money for a set period of time from as little as six months to several years and then pay you interest which will compound on the money you have loaned them. This is a safe investment because the bank and you are agreeing on a contract in which your money, with interest will be there in a certain period of time. Just be sure you know how long you are willing to invest because if you remove the money early you will receive penalties for early withdrawal, with will cost you money on your investment.
Bonds are also a safer type of investment; they work much like CD’s. The difference is that bonds are issued by corporations to you for a certain amount of time but these bonds are issued in order for the borrower to making long term investments into their corporations. Bonds are not money market tools such as CD’s. These are safer investments because the corporations are beholden to return your initial investment plus interest back to you.
You can also choose to invest in stocks. Stocks are shares of companies which your purchase. The price of these stocks will fluctuate in the stock market based on how well the business is doing, the economy, and other factors. This can earn you money faster but also has a substantial amount of risk. You are not guaranteed at any point to make money or to even receive the amount of your initial investment back.
These are three popular ways to invest money and are not the only options one has available. However, when deciding between these three, while other factors play a key, the major decision you must make is how much risk you are willing to take with your investment.