Everyone wants to invest to gain returns later and there are several ways for better investments too. To select an investment avenue, you must first match your risk profile with the investment product. Though every investor wants to make an investment that they get a sky-high return, it is not possible practically, unless you take the risk.
A high-return, low-risk combination does not actually exist. So, the investment choice depends on your risk equation. Get introduced to some of the investment methods here. This would help to make a better choice for your next investment.
Top 5 investment options to consider in 2021
Gold
It is a good old way but still stands strong with upgraded methods. Today, you can invest in gold in many ways. It includes:
• Bullions
• Coins
• Mining companies
• Future contracts
• Mutual funds
As keeping gold in the form of jewelry or stock comes with risk, the alternative way is to own paper-gold through banks. It is cost-effective and safe through ETFs. Gold becomes an underlying asset for on stock exchange. You can also opt for gold mutual funds or sovereign gold bonds.
However, as the gold prices keep fluctuating, it is recommended to investigate the company where you want to invest in gold. The Federal Trade Commission advises dealing with a reputable company if you choose not to invest in physical gold.
High-yield savings account
A savings account is one of the best vehicles for investors who need access to cash in the future. it costs you less and earns higher interest rates at online banks. Also, another benefit is that it is possible for you to transfer the money to the primary bank or an ATM.
Further, it adds liquidity. It is best-recommended for people wanting money back in the short-term, avoid the risk of not getting money back. You can also add or remove funds as required.
Private equity and venture capital
Apart from these normal savings methodologies, another best-recommended money-earning strategy is to depend on private equity and venture capital.
In general, Private equity firms limit direct investment to accredited investors, so you should qualify first to do so. Your net worth should be high enough to make an investment in PE firms.
High net-worth individuals can invest in private equity funds and earn a profit once the PE firm sells the holding portfolio company for a profit. You will earn multi-fold in a few years and gain industry knowledge. Learn about investment procedures and profit offerings before you decide to invest. Private equity funds generate higher returns but might lock up your money for several years.
On the other hand, venture capital investing involves lending money to business start-ups. They focus on early-stage companies and they allow accredited investors.
Further, you can become an angel investor too by providing financial backing for small startups or entrepreneurs. In exchange, you would get ownership equity in the company and gain profits down the lane.
Corporate bonds
The corporate companies issue bonds that can be purchased by anyone-from the company or the secondary market. You will earn interest over a set period of time and also pays the face value of the bond upon maturity. Though you may not get more money, when the company makes money, the interests remain the same when the company has a down year. It is a safe way of investment where your returns are predictable.
Cryptocurrencies
If you are a technical person and a good gambler, then investing in cryptocurrency is recommended. Otherwise, this may not be your cup of tea.
Before investing in any of the methods mentioned here, make thorough market research, gain knowledge about the ins and outs, know your risk equation and then decide to choose the investment method that suits you better.
