Ways to Invest Your Money After Thriving in the Stock Market

Investing will always be a little intimidating. It’s not a venture without risks, after all. The greater the potential return, the bigger the risks. Hence, even the most seasoned investors make careful considerations before shelling out their money yet again.

When you were only starting out, chances are you ventured into stocks. Stocks yield generous returns when the economy is thriving, and even if there’s a recession, stocks won’t necessarily hurt your wealth forever. Just give it a few years, and your stocks that have plummeted in value will surge up once again.

The current situation is a good example of why stocks are so worth it. Due to the pandemic, the stock market crashed on March 9 last year, and only three days later, the sixth-worst percentage drop in history occurred (9.99%). But today, with the vaccinations now being carried out, experts are positive that the stock market will recover. Sure enough, the Dow Jones Industrial Average closed at a record-high of 32,297 on March 10 of this year. If you had bought stocks during the recession, they would’ve increased in value recently.

Still, the stock market is tricky and unpredictable. Experts can have forecasts, but at the end of the day, anything can happen that may hurt your stocks. In that scenario, you know the drill: Don’t put all your eggs in one basket. Below are some excellent investment ideas apart from stocks:

1. Retirement Savings

Investing doesn’t have to be complicated. Putting money in stocks, bonds, or real estate isn’t the only way to grow your wealth for the long term. If you haven’t started saving up for your retirement yet, invest a portion of your monthly income to a 401(k) now. The earlier you begin, the bigger the money you can use on your retirement.

Though a 401(k) account is usually accessible because of your employer, three in ten workers still refuse to participate in it. Don’t make the same mistake, especially if you can afford to contribute your own savings to it. Besides, 401(k) is essentially risk-free; it’s as good as free money.

2. Emergency Savings

Another common money mistake many people make is forgetting about emergency savings. Just because you’ve got stocks and other investments doesn’t mean you can always have cash ready. During urgent times, like the COVID-19 pandemic, you need liquid funds readily available. And that’s why emergency savings are crucial.

Separate your investments and cash reserves. The rule of thumb is having the cash you might need on short notice, and putting the rest of your money on investments.

3. Real Estate

real estate investment

Real estate investing is simpler than you think, but not necessarily as easy. For example, you can buy an apartment unit, and have tenants rent it out so that you can have a monthly rental income. You can also buy a house, make improvements in it, then resell it for a higher price. But not all real estate properties appreciate in value over time. In the case of the apartment unit, there’s no guarantee that your tenants will pay you in time. The condition and reputation of the apartment building can also affect how much you can charge for rent. Simply put, several factors influence the amount of money you can make from real estate.

To avoid losing money, consider taking a mortgage out against a property. It will allow you to buy a property you otherwise can’t afford. Then protect yourself from risks by holding your property through a special type of legal entity, such as a limited liability company or a limited partnership. These legal entities will protect your personal assets if someone (e.g. a tenant) has an accident on your property. A lawyer specializing in real estate investments will help you form a legal entity.

4. Foreign Exchange (Forex)

What makes the foreign exchange unique is that there is no central marketplace for trading it. All transactions are carried out electronically, via computer networks between traders all over the world, facilitated by a true ECN brokerage company.

Get forex education before investing in any foreign currency. You don’t have to enroll in a special course; there’s a lot of information on it online, for free. Forex trading can be a little complicated for beginners, though it has some similarities with stock trading. If you have a business that involves regularly transacting with foreign suppliers, forex trading can provide you a hedge against currency risks by fixing a rate at which your transactions will be completed. Think of it like a fixed-rate mortgage; even if interest rates go up, you’d still be paying the same interest amount, even if it’s lower.

If forex or any investment product is too complicated for you to understand, don’t hesitate to find simpler alternatives. It’s important to invest only in what you can understand, not just because of the stakes, but also to be able to create a realistic financial plan. You can’t make financial decisions when you don’t even know what’s happening to your money. So tread lightly, and take risks wisely.

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