The dilemma of what to invest savings in is faced by many people, regardless of their age or stage of professional career. The topic of investing and saving money raises many questions, so in this article we have explained several important issues related to, among others: where to invest your savings, how you can do it, and why you should decide to take this step.
Investing your savings
Before undertaking any investment activities, it is necessary to answer a few basic questions that will allow you to specify the investor’s goal and the assumptions he wants to follow. What issues should a person planning to save money by investing it consider?
The amount of funds allocated to investments – the investor should determine what amounts he is able to spend on investments. Importantly, you do not need to have large financial resources to invest.
- The scale of the risk taken – a person planning to invest money must determine what risk they are ready to take. The riskier the investment, the higher the potential return on it, but also the greater the risk of losing money. People who care about minimal risk often decide on bank deposits, while investors ready for high risk can, for example, invest their funds in shares.
- Investment time – the investor should determine whether he is interested in a short or long investment horizon.
Investors should also think deeply about, m.in other things, where to invest their savings, as well as what the purpose of their investment is.
What can you invest your savings in?
After determining aspects such as the investment horizon, investment time or the pool of savings we want to allocate to investments, we can move on to the next stage of activities. As part of it, we need to think about what is the best way to invest our savings. We can choose from various potentially effective ways of investing money. Among the solutions that are worth considering, we can distinguish investing in, m.in others:
- investment funds,
- deposits and savings accounts,
- Property
- State Treasury bonds,
- Actions
- Artwork
- Cars
- Raw materials
- ores,
- cryptocurrencies.
Investment funds
A common answer to the question of where to invest savings is mutual funds. However, not every novice investor is exactly aware of what an investment fund is. This term is used to describe a form of collective investment, in which money collected by investors is invested in various securities, money market instruments, as well as other value rights. A great advantage of this form of investment is that the capital resources of individual fund participants are combined and then jointly invested. It is also worth mentioning that investors’ funds are managed by experienced specialists from investment fund companies (TFIs).
Deposits and savings accounts
People who are wondering where to invest their money so as not to have to accept high investment risk often decide on deposits and savings accounts. The downside of this form of investing savings is the very low potential profits that the investor can achieve – the interest rate allows you to compensate for the impact of inflation, but you should not expect significant profits.
Real Estate
Many people, when asked about the best way to invest their savings, will answer that in real estate. Some investors buy real estate in order to rent it out, while others practice so-called flipping, i.e. they buy a property, renovate it and sell it at a higher price. However, in order to be able to decide on this type of investment, more capital is necessary than in the case of many other forms of investment.
Stocks and playing on the stock market
Where to invest savings when we are able to take a high investment risk and expect a high potential rate of return? One of the possibilities is the stock market and investing in company shares. However, playing on the stock market is not the best choice for beginner investors – it requires a lot of experience as well as time and financial commitment.
Investment in works of art
A rather unobvious idea of what to invest money in are works of art. However, this requires from the investor not only significant financial resources, but also good knowledge of this issue. Investing money in works of art is quite risky, because it is not easy to accurately predict changes in the value of, for example, a purchased painting.
Investment in cars
Many automotive enthusiasts aim to invest money in cars. Interestingly, the potential attractive profit may be associated not only with new cars, but also with used or even accident cars. It should be noted, however, that, as in the case of investments in works of art, investing funds in cars requires advanced knowledge and experience from the investor.
Investment in raw materials
An interesting direction that can be taken by a person wondering how to invest their savings is the purchase of various types of raw materials. Commodities often purchased for investment purposes include, m.in, for example: agricultural raw materials, such as grain, or energy raw materials, such as oil. People interested in such investments must be aware of the high volatility of commodity prices and the dependence of this market on political events.
Investment in bullion
An attractive way to invest money for beginners is very often considered to be an investment in bullion. Contrary to popular belief, you can invest not only in gold or silver, but also, for example, platinum or palladium. Investing financial resources in bullion is an interesting solution for people interested in long-term investments.
Cryptocurrencies
Over the past few years, cryptocurrencies have gained a lot of publicity among investors. The stories of people who have become significantly rich on these investments ignite the imagination of inexperienced investors, but they should remember that this way of investing savings is extremely risky. Investing in cryptocurrencies when you do not have in-depth knowledge on the subject is not a good idea.