Meta description: Learn the six most common forms of investment opportunities for novice investors here. From property investment to foreign exchange trading, find the important details here.
All investment opportunities require extensive research before making any moves. For newcomers to investment, knowing what type of investment to make can be tricky. What should you research first? These common forms of investment are a great place to get an overview of your opportunities before starting research.
What Are the Common Forms of Investment?
Bricks and mortar have long been a safe investment opportunity for the masses. Nevertheless, many landlord-hopefuls do not realise the length and breadth of costs associated with property investments. You can learn more about these costs via this informative Wonga post – and even learn a way of investing in property without needing to buy a property.
#2: Money Market Accounts
A money market account requires some capital to open – usually opened at a bank – and they work by providing the account owner with interest based on the interest rates within markets. These are extremely safe because you decide when to take your money out and it cannot depreciate.
#3: Share Trading
The stock market may be an investment opportunity you have heard of before, but do you really know how it works? It’s quite simple. An investor will buy shares/stocks in a company in the hope that the company will become more profitable and valuable. This means purchases are based on political, social and economic research rather than the aforementioned ‘hope’.
For example, when cannabis was about to become legal in different countries, some people decided to buy more stocks in current medical cannabis suppliers that were already prepared to take over the market.
#4: Foreign Exchange Trading
Foreign exchange trading is like investing in a company through buying shares, but instead of investing in a business idea, you are investing in a country and its economics. The idea is straightforward. You buy currency from one country in the hope that either that currency will increase in value or the original currency you exchanged will decrease, so you can end up with more than you had originally.
#5: Unit Trusts
Unit trusts are more complex than the above opportunities and require a financial manager to purchase assets ranging from property to shares and even gold. These are then sold on at a profit with the original group of investors benefiting. Note, investing in a unit trust does not mean you own any of the assets. You only own a share of the rights to them.
#6: Let’s Talk Index Funds
One of the golden rules of high-risk investments is to diversify. This simply means not putting all your eggs in one basket, in case that basket falls – and you are left with egg on your face.
Index funds are like this idea of diversifying within the stock market. Instead of buying shares in a single company, index funds can be bought but represent a group of companies together.
How to Choose an Investment Path?
The type of investment that you choose will depend on how much money you currently have to invest, the returns you hope for and the level of risk you are willing to take. These all need to be considered against the six opportunities above – before investing.
Whatever area of investment you enter into, make sure you adopt a well-researched strategy that is secure.