Seven Ways to Invest Money
Previously we have discussed ways to save and make more money. We don’t want to waste that money though. We want to put it to work for us and make it into even more money. Here are seven ways to invest money.
More than One Way
When we hear the word investing, we usually think of the stock market. And while that is one way to invest, it’s certainly not the only way.
- Rental Property
Too many people think you have to be super rich to be a real estate investor. You don’t. More people than you realize are real estate investors. No, they don’t own fancy office towers or hotels, they own rental property.
You may have considered owning rental property but been put off the idea by the thought of becoming a landlord. You don’t know anything about fixing clogged toilets, and you don’t want to learn. But you can own rental property without being a hand’s on landlord.
It’s called turn key rental property. Roofstock is a turn key rental property company. They send you listings of homes that are not only move in ready but already have rent paying tenets in place! All you do is buy the house and pay a management fee each month. Roofstock does the rest. Roofstock makes rental property the ultimate form of passive income.
- Real Estate
Not everyone can afford a rental property and once upon a time, not everyone could afford to invest in commercial real estate either. But now real estate investing is opening up to the rest of us.
Fundrise lets small investors invest in eREIT’s, electronic Real Estate Investment Trusts. You don’t have to be an accredited investor, the minimum to invest with Fundrise is just $1,000. Fundrise pools relatively small amounts of money from small investors and loans the money to commercial property developers to finance their projects. It’s crowdfunding for real estate!
- Peer-to-Peer Lending
When people need money for things like paying off high-interest credit card debt, they no longer have to go the traditional route of getting a bank loan. Now they can borrow money from other people. This is peer-to-peer lending.
The benefit for borrowers is a typically lower interest rate than a bank would offer and the benefit for the lenders is the chance to earn a return on the money they lend, just like banks do. Lenders can loan money to one individual or across a pool of borrowers, lowering risk.
You need to do some research before deciding whom to lend to but all of the information you need on borrowers is provided on the platform.
Investing in ETF’s is investing in the stock market, but it’s much easier than researching and investing in individual stocks. When you invest in an exchange-traded fund like Betterment, you’re buying a lot of stocks and or bonds at once. ETF’s pool their investor’s money and use it to buy a group of investments.
There are usually no or low minimums to invest, the fees are low, and you don’t need to know much about investing to get started, so ETF’s are often a person’s first foray into investing, a gateway drug to future wealth.
Bitcoin is the most well-known of the cryptocurrencies. The value of Bitcoin has skyrocketed in the eight years since it was founded. In 2011 Bitcoins were worth $1. Now one Bitcoin is currently worth more than $6,000.
Bitcoin prices are volatile making it a risky investment, but there is no question that early investors have made a killing. If you have some play money that you can afford to lose, you can buy and sell Bitcoin at Coinbase.
- Invest in a Small Business
Small businesses investing can be a great form of passive income but where do you find such an opportunity? Because small business loans from banks are harder and harder to qualify for, small business owners are interested in alternatives.
Local Stake is one alternative source for loans. They connect small business owners in search of loans with investors in search of opportunities.
Investing in gold can be a good hedge against uncertainty. When the news on Wall Street is bad, as it was during the 2008 financial crisis, the price of gold soars. Gold goes up when everything else is going down.
You don’t have to fill your house with gold coins or bars although people afraid of stuff like the zombie apocalypse do, you can invest in gold mining stocks or ETF’s that focus on gold stocks.
No more than 10% of your portfolio should be invested in gold. Think of it as an insurance policy, not a major part of your investment strategy.
The Important Thing
Some investments, ETF’s and eREIT’s, are safer than investing in things like cryptocurrencies and small businesses but all of these things can have a place in a diverse portfolio. The important thing is that you start investing immediately. The longer you wait the more money you leave on the table.