Stocks or Not? 3 Major Methods of Investment and How They Work

If you’ve read much financial advice, you’ve probably heard at some point that the key to prosperity is making your money work for you. One of the most common ways to do this is to invest your money, but this isn’t as simple as it sounds, because there are many methods of investment out there. Here are three of the most common and how they work.

Stocks

The stock market is what usually comes to mind when people think of investing. With this investment method, you’re buying one or more shares of a company. If the company’s value increases and its stock price goes up, then you’ll make money, and vice versa. 

Although the stock market’s overall value tends to go up over time, plenty of companies fail, meaning it’s important not to risk too much on unestablished companies. 

Another way to invest in stocks is to choose an index fund that encompasses a variety of companies. This makes it easier to build a diverse portfolio and reduce your risk of losing all your money from one company tanking.

Real Estate

Real estate investing is another popular investing method, and there are multiple ways to make money from your real estate. The simplest is to purchase real estate and wait for the value to increase. 

You’ll then have a more valuable asset then you originally purchased, and with a mortgage, you can get the leverage to buy real estate worth much more than you have saved up. 

You could also purchase real estate, and then rent that property out. Not only will you own the property, but you’ll be making money from it.

Commodities

Commodities cover a wide range of raw materials. These include gas, oil, agricultural products and precious metals, such as gold, silver, and platinum. Precious metals are popular because it can be purchased easily online from businesses like Rocky Mountain Coin in different forms. 

Although commodities are often volatile, they offer a way to diversify your portfolio, and there’s the potential for high returns if you purchase a commodity that comes into high demand. 

That volatility can work against you, though, and it’s important not to let any major swings in your commodity’s value scare you and force you into rash decisions.

Investing may be the wisest financial decisions you make. No matter which of the options above you select, make sure the bulk of your portfolio is in lower risk investments that should deliver a steady return on your money.