Finding right things to invest in to make money can be tough at first, especially for people new to investing. Web is full of information about ways to earn money online, but the advices about worst and best investments to make money are sometimes controversial.
There is no ultimate investment solution that will suit everyone. Some people prefer to invest money in stocks and say that mutual funds bring very low returns, while others successfully invest in mutual funds to create passive income online. This happens because everyone has different investment goals. If you want to invest extra money long term, your strategy has to be different than if you were looking for best way to invest money short term. This article aims to provide an unbiased look at some of the most popular ways to invest money.
Where to invest little money
Not having a large amount of money at hand shouldn’t stop you from creating income online. Most people start investing with little money and significantly increase size of their portfolio in the next several years. If you are on a limited budget compare the following ways to invest and earn money.
Invest money in bank
In many countries banks offer several affordable investment options to choose from. Depending on your location, this can be retirement programs, long-term deposits or bank owned invest funds. People invest money in bank because such investments are considered highly reliable, but this comes with a lot of disadvantages. Banks are large old-fashioned financial institutions. Their commissions for services are usually higher than those of modern financial companies. Because of complicated rules and regulations, banks have to comply with, this sector is very slow to update and often fails to meet the needs of a 21st century consumer. A serious problem when investing money in bank is lack of liquidity. Should you need to take your money out of a retirement plan or long-term deposit, an early withdrawal fee will eat most of your profits. Short term savings accounts can barely be considered an investment, because their returns often fluctuates around the rate of inflation.
Invest money in business
Even if you have little money you can still invest in business through crowdfunding or peer-2-peer lending platforms. Kickstarter is probably the most famous website for such investments, but it also has a lot of competitors. If the startup becomes successful you may get extra high return on your initial investment. However, if you invest money in business through crowdfunding sites, you need to be aware of the risks. Getting returns on such investment may take one year or two, but you may as likely never get the money back – no matter how strong the project looks, there is no guarantee the company will succeed. Research shows that only 1 or 2 out of 10 startups manage to break even, others go bankrupt. Team behind the project plays a very important role in this business. To reduce risks, opt for startups that have former entrepreneur on board or have previously run successful projects. Startups run by creatives with no business experience are more likely to fail, no matter how good their ideas are. Don’t rely on your investment in startups as the main way to make money – this is too risky and will not help you create passive income online.
Invest money in gold
There are different ways to invest money in gold, but not all of them are suitable for investors on a budget. To save on commission costs, consider investing in gold through ETFs or trading gold futures. Gold futures and options are widely available through international retail brokers, including discounted brokers. To protect your initial capital always start investing with as little amounts of money as possible and gradually increase when you learn investment basics and start to understand market behaviour.
Invest money in copy trading
Copy trading is one of the most attractive methods to create passive income online for people with tight investment budget. Social trading services accept small initial deposits. Some of them have very low commission rates or even zero commission (for example, MyDigiTrade copy trading service is provided at no extra charge to the users). In copy trading you make money online by mirroring strategy of experienced traders. The trades are copied to followers account automatically at the same time as the managing trader opens or closes them. For people without prior experience, copy trading is a safer alternative to direct market trading, but actual risks depend on the reliability of chosen strategies to follow. The information about risks and previous strategy performance is provided by copy trading service.
Invest money in mutual funds
A lot of people looking to earn money online opt to invest in mutual funds. This investment option is especially popular in developed countries with stable economy and clear government regulations such as USA, UK or Germany. When choosing a mutual fund to invest it is important to evaluate the risks thoroughly. For example, funds that specialise on common stocks are usually more volatile, but may bring higher results in long term perspective, whereas funds that specialise on bonds are more stable and may be a more suitable option for people with low risk tolerance. There are also balanced mutual funds that combine both approaches, futures mutual funds, currency mutual funds, etc. Well-known mutual funds often have high commission costs that are not reflected in their performance reports. Don’t forget to subtract those commissions when figuring out your potential profit.
Invest money in ETF index funds
Index funds are a less expensive alternative to traditional mutual funds. Index funds represent the structure of an underlying index, for example Dow Jones or S&P 500 and demonstrate similar performance. This is a balanced and well diversified investment. Index funds are traded on the exchange the same way as regular stocks, so you will need to have a brokerage account to buy them. As an investors with a tight budget you need to find a broker that charges low commission for their services.
Invest money in Forex and options trading
Currency trading or binary options trading through a retail broker is another popular way to make money online. Some retail brokers accept minimum deposit from 1 dollar. Today anyone can start trading forex in half an hour or less. However, currency markets are volatile and a lot of people who start trading without prior experience loose their money. It is important to get accuintained with successful strategies and hedging techniques before putting your capital into trading. One of the effective ways to do so is to see how other traders manage their portfolios – data provided by copy trading platforms such as MyDigiTrade can be a good learning material for this.
Best way to invest large amounts of money
Same as when choosing where to invest little money, there is no single best way to invest a large amount of money online. The answer where to invest extra money long term will depend on the amount of capital and the timing when you will need your money back. Most ways to invest money mentioned in the first part of this article can be used by people looking to invest large amounts of money as well. But there are ways to create passive income that are only open to people with larger initial deposits.
Invest in shares
Although anyone can invest in shares, it is hard to maintain a balanced portfolio if you don’t have enough money. Premium stocks, such as Apple or Facebook worth over $100 dollars and are best to be bought in larger quantities (50 or 100 stocks) to reduce commission fees. Yet buying stocks of just one company is too risky. To keep risks to a minimum you need to buy stocks of several different companies, preferably in different sectors or even different countries.
Invest money in hedge funds
Hedge funds are run by experienced fund managers and are allowed to use more sophisticated investment strategies than normal mutual funds. Hedge funds usually rub dry aggressive strategies and hedge risks by buying a variety of assets such as options and financial derivatives. In the US hedge funds are only open to accredited investors.
Invest money in startups
Startups are a booming investment niche. Investors inspired by Uber, Skype or WhatsApp success stories hunt for the next unicorn. However, this way to invest money in business remains extremely risky. There are only few unicorns among hundred thousands of startups being launched around the globe every year. Best way to gain more information about startup investments is by joining your local venture capitalist or business angel community.
How to invest and make money daily
Not all methods mentioned above suit people looking to invest money short term and make daily profits from their investment. Forex or CFD trading may bring high returns daily, but profit margins on this market are non stable. Gold futures or commodity futures are other assets that can bring daily profit when used with caution. For best results look for more information about scalping and intraday trading.
How to invest and make money weekly
If you prefer medium-term trading strategies, look for brokers with low overnight position fees.
On top of direct currency, futures or CFD trading, copy trading is a good solution for collecting weekly profit. In some cases, stock trading may also be used to make money online weekly.
Long-term investment strategies
When investing money for the long-term it is important to build a balanced portfolio. Choose trading instruments with higher chance to survive through an economic crisis. Make sure that part of your money is invested into safe-haven assets such as gold or japanese yen. Trusted mutual funds, ETFs, hedge funds, investments in stocks and copy trading can also bring high returns on long-term investments.
No matter what is the size of your investment account, it is best to start with gathering information and learning from successful investors. To have a full picture, research all available options in general and then focus on one or two that seem most attractive to you. Once you are familiar with one thing, for example forex trading or futures trading, learning about other groups of assets will become a lot easier. To invest and make money online successfully during extended periods of time, you need familiarise yourself with several asset classes so you can switch from stocks to bonds or from gold to currency trading when one group of assets goes down and the other one goes up.