There’s a variety of assets available to investors today. However, before you decide to invest in any, you have to take note that every type of asset has its own reward potential and risks.
Finding the perfect combination of assets to reach your financial goals is entirely up to you, but by doing research, you can be assured that you’re prepared to make any smart investment decisions.
If you’re ready to make investments, below are the types of assets you can invest in:
1. Bonds
These are debt securities issued by the governments and corporations to raise funds. If you’re an investor and you buy bonds, you’ll need an initial investment. This upfront amount is known as the principal.
Once bonds mature or expire, the investors are paid back with their principal and receive a periodic, fixed interest payment from the entity that issued the bond.
Bonds and their other types, including Treasury bonds (T-bonds), are a good investment for people who are looking for a steady rate of interest payments. With T-bonds, investors usually receive a fixed rate of interest every six months until the maturity date, which can be in 20 to 30 years. To know more about T-bonds, check out Garnaco.
2. Peer-to-Peer Lending
This replaces the banks’ role and helps most denied borrowers to get a loan at lower rates than big-scale financial institutions. Today, peer-to-peer lending has become a viable income-generating asset and a multi-million-dollar business.
With peer-to-peer lending, investors have the chance to make 5% to 7% in annual returns. But it also comes with moderate risk because other borrowers may break their contract obligations.
3. Real Estate Assets
One of the attractive perks of real estate investing is that it allows investors to increase their wealth without having a huge capital upfront. Moreover, real estate investing can quickly give you the opportunity to expand your portfolio compared to some investing opportunities.
In terms of real estate assets, rental properties provide the opportunity to generate a steady income over a long period of time. Just make sure to hire the best property manager to ensure that your rental properties run smoothly.
4. Commodities
Many people invest in commodities, such as timber, oil, wheat, silver, and gold. Unlike other types of assets, commodities don’t pay you an income. As a matter of fact, some can cost you money to hold, so people invest in them to make a capital gain. The price of every physical commodity can be unpredictable and volatile, so it’s considered a high-risk investment.
5. Shares
These are issued by companies. For example, if you own all of the company’s shares, you technically own the company.
If a company doesn’t trade on a stock exchange, it’s called a private company. Once institutions invest in them, it’s referred to as private equity.
Investments in private companies can be rewarding, but it can be difficult to turn your investment into cash compared to investing in public companies, so you must demand higher returns for this kind of investment.
Share prices are often determined by demand and supply. They can also react to things outside the companies’ control and may be volatile.
6. Stocks
These refer to the investments in business equity and enable investors to generate income through various means like dividends. Generally, dividends don’t require a certain amount of capital to benefit from and are rewarded over time.
It’s crucial to know the difference between investing in mutual funds and investing in individual stocks. The individual stocks represent the opportunity to purchase single shares in a particular company to test out the industry. Investing in mutual funds, on the contrary, involves investing in several stocks across different companies.
Since mutual funds are diverse than individual stocks, they offer less risk. But individual stocks can provide you higher results. If you’re interested to invest in stock, ensure to familiarize yourself with the current stock market to get a better idea of the companies you may invest in.
Bottom Line
Regardless of where you are in life, you can start building wealth by investing in the different types of assets listed above. Depending on your preferences, you can choose any assets to invest in. Just make sure to do research first before you decide to invest and put all your hard-earned money into it to achieve results.
