Introduction
As a newbie investor, you may be wondering how to earn money via investing. You must seek the right kind of guidance to help you with investments. It is quite overwhelming to choose between stocks, bonds, real estate assets, cryptocurrencies, or other financial trading instruments. You must therefore approach a well-experienced investment advisor who sits hand-in-hand to discuss investments and gives you well-crafted tips on how you should be dealing with your money.
On this parlance, let us discover the 10 most lucrative Investment Options For Retail Investors. Helping you get started on the same:
Why should you start investing?
You must start investing to maintain a better financial position for rainy days that lie far ahead of you. You must have a far-sighted vision while you want to safeguard your life on a safe pedestal. You must start investing to help your kids receive a consistent education at their schools or colleges. You must invest to secure your life during your retirement when those lucrative 9-5 jobs are no longer available for you. You must provide for your family members in terms of getting them a brand new home to live in or plush cars to drive in.
Henceforth, you must divert your disposable funds towards safer havens of investment so that you can fulfill your short-term, medium-term, and long-term goals in a streamlined manner indeed.
What are the Different Investment Options For Retail Investors?
These are the top 10 Investment options for you to choose from. Helping you through with a rundown of the same:
Stocks and Equities
Investing via stocks or equity options is the simplest way to get started. Here, the initial is not all that high. You can buy a couple of stocks at the start of market hours and close the sale deals during market hours. This is what is called intra-day trading.
You can aim for higher profits if your stocks increase in their price value. You can also own shares as direct investments in ownership companies. Dabbling with shares, stocks, or equities requires a better knowledge of how markets work. You must have a higher risk tolerance to cope with the higher volatility of market conditions. Investors who want long-term investment growth for their portfolios can consider their investments in stocks and equities.
Bonds that provide stable income opportunities
You can invest in bonds if you are looking for stable sources of investment. When you invest via bonds, comprising governmental bonds, corporate bonds, and real estate mortgage deeds. You can purchase bonds if you are looking for stable resources to enhance your investment portfolios.
You get periodic interest earnings and coupon payments on long-term bonds. Plus, you get your complete capital when these bonds are up for redemption. Risk-averse retail investors like retirees, pensioners, and senior citizens invest in bonds as they do not want to risk losing their capital in volatile assets.
Mutual Funds
Mutual Funds refer to diversified investment portfolios comprising bonds, fixed deposits, equities, fixed-income securities, and a couple of real estate assets too. These are packaged as investment portfolios that are taken up by investors. You can earn attractive rates of return if you make your investments with reputed Mutual fund companies. With effective managerial governance, your capital vault is safeguarded at all times. You can also have hands-on with multiple sources of investments, like:
- Interest earnings
- Coupons
- Dividend payouts, etc.
This is a very good option for passive or beginner investors who do not have the time or knowledge to deal with market-linked investments.
Exchange-Traded Funds or ETFs
Exchange-traded funds or ETFs are traded similarly to stocks or equities at a stock exchange office. These are diversified investments comprising bonds, capital assets, fixed-income securities, and money assets that provide lucrative returns to retail investors who risk depositing huge sums of money into investment or wealth management firms. ETFs are subject to a couple of market risks with an element of complexity added to them. You can avail etfs as a viable option for those of you who are cost-conscious and yet looking for diversified investment portfolios.
Index Funds
If trading with a single commodity, equity share, or stock option risky business for you, you can consider the idea of choosing index funds as your investment option.
You can think of the Nifty 50 or the S&P 500. Here, the top 50 Indian stocks or the top 500 Fortune 500 companies that are prevalent worldwide are indexed and put into diversified income-earning baskets with different configurations.
The market risks are relatively lower as the strike rates do not apply to individual stocks, and the index funds grow at a steady pace indeed. This way, your investment portfolios get stronger. With very low fees, you can get started with an investment firm that specializes in Index Funds. This is ideal for investors who have a hands-off approach to investments and are aiming to seek passive income growth as well.
Real Estate Investment Trusts or REITs
You can try Real Estate Investments. You can try to procure real estate shares, real estate mortgage deeds, and real estate bonds. These are issued by Real Estate Investment Trusts or REITs. You get regular income payouts like interest earnings, dividends, and so on. Your investment portfolios can garner exposure to real estate without you owning physical properties or plush offices. REITs are sensitive to interest rates, and these portfolios are meant for income-seeking investors.
Cryptocurrencies
You can try including Bitcoin currencies that provide promising returns on your investments. These coins have recently been introduced and therefore can be highly volatile in marketplaces. The regulatory authorities are also not properly formed to assess the monitoring of how crypto markets work as a whole. Therefore, it is at your entire risk as an investor to decide whether you want to dabble with cryptocurrencies or indulge in investing via Bitcoin mining. The investments are therefore suitable for highly risk-tolerant investors.
Robo Advisors
Robo advisors provide sophisticated services on fully automated investment platforms. The bots constantly monitor market movements and check for buying or selling prices of your stocks or equity shares. They also monitor simulated charts to give you recommendations on what stocks you should buy when. Plus, it gives you instant updates on what stocks or shares you sell at the end of a market trading day or the beginning of a day. You can put your intra-day trading operations on autopilot mode and allow robo advisors to buy or sell shares on your behalf. This way, you can earn good money from stock markets even without quitting your current 9-5 job.
You only pay for the software set up and there is no fees on the trading transactions you undertake from your demat or investment accounts. This is a system that is most suited for investors who do not want to personally trade but want a more hands-off approach to investing. Even if you are a beginner trying to learn how investments work, you can choose automated robo platforms to continue your successful journey with investing.
Certificates of Deposits or CDs
Certificate of Deposits resemble fixed deposits that are circulated in developing countries like India. The CDs are typically circulated across the US. These are investment portfolios that come to you with fixed rates of return. The money is locked in for a period of 20/ 30 years.
You then get your capital reimbursements along with accrued interest earnings. You also get periodic interest payouts or coupons once every 6 months or 12 months. The stable passive income and the return of capital is what makes this particular investment portfolio highly appealing to traditional investors like retirees, pensioners, senior citizens and conservative retail investors.
Commodities
You can invest in commodities like agro products, silver, gold, oil, and so on. These commodities leave you with relatively stable investment portfolios as compared to equities. You get stable returns on your investment portfolios, and you can hedge oil, silver, or gold to protect yourself against inflation. The commodities markets can also fluctuate due to environmental downsides like floods, hurricanes, or the occurrence of landslides. Investors usually go for commodity-based investment portfolios to create diversified income generation baskets and to hedge against inflation.
The Bottom Line
You must build a comparison table mentioning the features, pros, and cons of each one of these investments as stated for you in this blog article. You must read the offer documents carefully before investing. What are your thoughts on this? Do mention it in the comments below!
Frequently Asked Questions or FAQs
How do money market funds work as investment products?
Answer: You can dabble with high-value currencies like dollars, pounds, euros, yen, and crypto coins under different configurations or permutation combinations. You must pay the relevant brokerage account to have your currency account set up. Currency fluctuations help you earn returns. You can hedge money market currencies against inflation to diversify your portfolio and boost your savings account.
Can a shareholder deal with etfs the same way as stocks and bonds?
Answer: Yes, the etf works similar to equities or stock exchange markets. With a minimum investment, you can trade with etfs that deal with intra-day buying or selling of the same. Similar to money market accounts, you can have your etfs garner higher returns for you, along with investment diversification. The market volatility for etf asset classes is also on the higher edge, and therefore, you can allow a broker to have your portfolios actively managed.
What are lower-risk investments?
Answer: Bonds, CDs, and pooled funds like mutual funds are relatively lower-risk investment options, as you need not deal with volatilities like stocks or equity assets. You can allow fund managers to set the accounts for you and help you with off-beat strategies. You can try to beat the average investor when you have hand-holding assistance on what you do next. This way, your financial security is insured to a greater extent indeed.
