invest11 ways to invest your money, listed

Deciding where you want to invest your savings is complicated.

Building an investment portfolio to get the most out of our money can be challenging, especially since the amount of information out there is messy and confusing. There are plenty of financial products where we can invest our savings into. We just need to decide in which product do we invest in and how much money do we put in each.

We made it easy for you to get the overall picture on the options of financial products available for investing.

In this article we put together a list, alongside with the explanations, on the different options available where you can consider to invest your money.

1. Current account.

A current account, or checking account, it’s described as a savings account where individuals have their money, where credit cards and billing addresses are linked to. The money sits on the bank and generally produces no rentability. It’s left there and loses value when inflation goes up.

2. Bank Deposits.

Bank deposits are a financial product where individuals place their money, generally with a fixed rate of 1,5% or 2%, for the time period of one or two years at most, and they cannot touch their money until the time period is over. They cannot have their credit cards linked there.

3. Bonds.

Government bonds are a financial product that generally are given an investment period from five to ten years, where individuals buy government debt in exchange of a rentability depending on the country the government is from. It’s considered a complex financial product.

4. Investment funds.

Investment funds are a financial product offered by either banks or independent management companies. Generally, Banks have a closed structure, where individuals can only buy from the financial product options available the bank manages. Some banks have an open structure, where they offer options by other companies that customers can buy through them as well. There are independent management companies, that are companies, like JP Morgan, Carmi nag, Cobas, or Morgan Stainley, that manage and offer financial products to individuals. Those can be funds of fixed rate or variable rate, and can vary by geographic location, for example they can be global, or focus only on assets from Europe, Asia, North America, Oceania, etc. It’s considered a complex financial product.

5. Stock Market

The stock market is where shares are bought and sold by either individuals or bigger corporations. In essence, a share is a piece of a business. A business is a concept, an economic activity, therefore, it’s intangible. This is the reason why the market is volatile. Because it’s based on the opinion of individuals over the value of an economic activity. Investors cannot touch or see their asset, as its value its completely perceived. Liquidity is high. It’s considered a complex financial product.

6. Retirement plans

Retirement plans are a financial product like investment funds, with the exception on how taxes are paid. Taxes are paid when the person is retired, as well as only then the person has access to the money invested. It’s considered a complex financial product.

7. SICIMIs

The short SOCIMI, in Spanish, stands for Sociedad de Inversion Inmobiliara, which means Society of Real Estate Investments, and is a financial product that uses a large Investment of a minimum of 100.000 euros to buy a part of a real estate asset and get rent plus the proportional difference in price when sold. It’s considered a complex financial product.

8. Crowdfunding

Crowdfunding and Crowdlending type of platforms offer customers to invest small amounts into real estate projects to own a part of them. They are usually limited in time, which makes the potential returns lower than with an investment where is possible to have it long term.

9. Commodity Assets

Commodity assets, such as gold, silver and diamonds, are considered safe assets to place money in times of uncertainty, because those are tangible goods that historically have had value by themselves. Nevertheless, it can also happen that the value of those goods slowly fades, like it’s happening with diamonds, now that is becoming impossible to distinguish between the natural gem and the lab-made one.

Also, commodity assets usually give no rentability, meaning that we can only make money with the gain or loss on the difference in the price we buy and sell.

10. Buy-to-sell

Buy and sell residential, logistic, offices or commercial properties, to get the difference on the price bought and sold. Sometimes, an improvement on the property is made to increase sell price. It’s more like a strategy that a financial product itself, but it would be as well considered a complex financial product.

11. Financial Derivates

Financial products with a complex concept which is usually abstract and difficult to understand. Rentability is high, but risky if you are an independent investor. Legal complications by the CNMV for individuals to invest in them. The risk is extremely high. It is not a transparent financial product. It’s considered an extremely complex financial product of difficult understanding, even for professionals.

Now, you must be asking yourself: With what option you should I go? What’s the right choice among all of them? What should I do now?

The answer will, of course, depend on your personal and financial situation, as well as what your goals are, including the time horizon you have ahead of you and, most important, your risk tolerance. Get yourself assets and investments that will let you sleep at night. Some people can’t sleep knowing they could be gaining more returns despite the risk, and others can’t sleep if they have investments that could lose a quarter of its value. Depending on which one of these persons are you, your investment strategy will include one type of investments or another.

You can choose to invest in as many financial products as you want! Depending on your budget limitations and your situation, you can add the investment options that fit within your investment portfolio, based on your investment strategy. And, thanks to the compound growth theory, the earlier you start, the more time those investments will have to grow and more exponential will this growth become!