Investing in a smart investment is often a good idea. In fact, it’s one of the best ways to make money and grow your nest egg. But with so many options out there for where to put your money, how do you determine which investments are “smart” and which are just plain bad?
The truth is that when it comes to investing, everyone should avoid certain things like penny-stock scams and unproven startups. But there are also some investments that everyone should make — even if they don’t have much money to invest at first. Here are ten investments everyone should try:
A Real Estate Investment Trust
A real estate investment trust is a great way to diversify your portfolio and get exposure to real estate without all the headaches of buying and managing property. You also benefit from tax-free dividends, which means more money in your pocket every year.
REITs aren’t just for the rich and famous, either: REITs provide a low-cost way for individual investors to invest in apartment buildings, shopping centers, and other commercial properties anywhere in the world.
Gold and Silver
As a hedge against inflation, such as our current Federal Reserve-driven environment of 2% to 3% annual price increases, precious metals have been shown to provide positive returns over the long term. In addition, when the economy is uncertain or in recession, physical gold and silver tend to appreciate as investors seek safe havens for their wealth.
In times of geopolitical uncertainty (such as war), gold and silver rise dramatically. Lastly—and perhaps most importantly—gold and silver can be used as hedges against currency devaluation by central banks around the world, targeting inflation rates below zero percent at times when interest rates are near zero percent or negative interest rates.
Cryptocurrencies
There are many ways to invest in cryptocurrencies. The first thing you need to do is find the best cryptocurrency exchange for your needs. You can learn more if you’re a beginner by reading articles such as bitcoin explained, and other beginner investment resources. Then, you can buy and sell cryptocurrencies on that platform or use an automated trading bot.
Most people trade cryptocurrencies on exchanges such as Binance or Coinbase Pro (formerly GDAX). These exchanges charge fees for every transaction on their platforms: buying or selling cryptocurrency will cost a certain percentage of each transaction’s value in addition to any other fees associated with these transactions if they’re not conducted in bitcoin.
You could also engage in more complicated strategies involving margin trading or short selling, but these strategies require advanced knowledge of how markets work and come with significant risks and costs attached, so we’ll stick with just buying and selling for now!
Commodities
It is the act of investing in commodities. Commodities are raw materials that are bought and sold on the market. They can be used as a hedge against inflation because their value tends to rise when inflation rises, but they also tend to fall in price when the economy is doing poorly.
Commodities are a good investment for when the economy is doing poorly because they typically do well during recessions and vice versa. Conversely, when times are good for everyone else, commodities tend to do poorly as people move away from them towards stocks with more potential growth.
S&P 500 Index Fund
An S&P 500 index fund is a mutual fund that tracks the performance of the S&P 500, an index of stocks in the United States. The S&P 500 has more than 500 stocks and represents about 80 percent of all publicly traded securities.
As with any investment, there are pros and cons to investing in an S&P 500 index fund. If you want to invest in an S&P 500 index fund, there are three things you should know: how to get started investing, how to check your account status, and how to buy shares.
Pay Off Debt
Debt is a horrible thing to have, but it’s also easy to get into. The average American household carries $16,000 in debt. So if you’re looking for a way to improve your financial situation and invest more money, getting rid of high-interest debt should be the first step on your list.
Pay off credit card debt first; many credit cards charge between 18% and 30% interest annually! And not only are those rates high—but you’re also paying interest on top of that rate if you’re only paying the minimum payment each month (which most people do). So the sooner you pay off this debt, the less amount of interest you’ll pay overall.
Once your credit card bills are paid off, start tackling student loans next; these aren’t usually as bad as other types of loans since they don’t charge as much (no more than 6-7%), but they can still really add up over time if left unchecked! Finally, work on any available car or home equity lines to get those paid off before trying anything else.
Your Retirement Fund [401(k) and IRA]
It’s important to note that while a 401(k) and an IRA are both retirement savings plans, they’re not the same thing. You can think of a 401(k) as an employer-sponsored plan (where you get your account), and IRAs are self-directed (you have more control over which investment options you choose).
Both plans allow employees to contribute up to $18,000 annually from their paychecks into the account with pre-tax dollars. The money grows tax-deferred until it is withdrawn after retirement age. In addition, if you receive employer match contributions—an added benefit that many employers offer—then even more money will be put toward your future financial independence.
Pay Off Your Mortgage
If you’re considering investing, it’s tempting to believe that you should put the money into your 401(k) or IRA instead of paying down debt. But paying off your mortgage as quickly as possible may be your best investment decision.
Why? Because once your mortgage is paid off, every dollar you earn is yours to keep. And while investing won’t work like that—you’ll have to pay taxes on capital gains and income—the long-term returns are still much higher than those offered by any savings account that’s currently available.
The average house price in America rose by nearly $100,000 between 2005 and 2017—an increase of almost 30%. Inflation has stayed relatively low. So the average homebuyer would need only $16 more in 2005 dollars to buy the same things they bought in 2017 if they couldn’t afford them. Their purchasing power hasn’t changed.
Health Insurance Account (FSA)
Health savings accounts (HSAs) allow you to save for medical expenses. This account is not a regular bank account, but you can use it as one. When you have an HSA, you do not pay taxes on the money that goes into your account or any interest earned on its balance.
You can also withdraw funds from an HSA without paying taxes as long as they are used to pay for qualified healthcare costs. However, it’s important to note that if your employer contributes to your HSA and offers other options, such as defined-contribution plans like retirement plans or 401(k)s, they may not offer an HSA option.
College Savings
College savings is a great way to save for school. It’s also a great way to get a head start on your retirement. So if you’re not saving for college, why not?
The best way to save for college is with a 529 plan, an investment account that grows tax-free and can be used to pay for qualified college expenses. The money in these plans can be withdrawn at any time without penalty or additional taxes if it’s used to pay tuition, fees, books, or room and board at eligible schools—including public colleges and universities and private ones. In addition, you can contribute up to $15,000 each year. It is $30,000 total if someone else doesn’t already have one set up under their name or yours if they’re over 18.
(Disclaimer: This content is a partnered post. This material is provided as news and general information. It should not be construed as an endorsement of any investment service. The opinions expressed are the personal views and experience of the author, and no recommendation is made.)