Why should you look at alternative Investment Ideas? Most people prefer to keep their savings in banks as their money remains safe and earns a steady return. It seems like a good idea, especially for people with little understanding of the financial world. Banks mainly invest in lending and often earn more than you do on your own money.
However, you can earn a lot more by investing your savings elsewhere. It may seem to be somewhat of a wild idea as a working mom, but it’s not. Many safe investments offer better returns than your typical savings accounts without any risk of losing your hard-earned money. You need to carefully pick which option is ideal for you.
Most investors are confused by jargon in fine print that comes with the paperwork. There is no need to worry about it. You can seek advice from a financial adviser before investing your savings to understand the various scenarios described.
Some fruitful investment ideas for your savings other than banks are:
1. Mutual Funds
Mutual funds companies offer different investment opportunities to potential investors. The choice of investors puts their funds in the selected program. You can study the documents and understand the risks and benefits of each and decide accordingly.
Types of Investments
Usually, money is invested in the stock exchange as well as in various businesses. The money market is another significant investment area for these companies. You can see which option suits you the most, and you can invest accordingly. It is always a good idea to start with safer options before taking any risks.
Mutual Funds returns are based on market conditions. Usually, they’re safe, and there are no losses. There are, riskier, better-paying options available in the funds as well. However, you should only opt for them if experienced and have an understanding of the intricacies of the industry.
2. Real Estate
There are many kinds of real estate investment ideas and options available. Commercial and residential real estate are excellent options as their value continues to appreciate over the years. If you invest in a new project that is under construction, you will get the best possible price.
The Waiting Game
However, to make good money from real estate, you need to wait a few years before the returns are sizable. Ideally, the property should be located in a decent neighbourhood, which helps in boosting its overall value.
A Big Investment
You also need to invest a fair amount of money in acquiring the property in the first place. Beware that the housing market sees some tough times every now and again and you’ll have to wait out any such downturns to get a good return on your investment. If you’re the first buyer, you can likely sell it for the maximum profit.
If you do not have enough funds on your own, you can look into crowd-funded real estate acquisition. Several people pool resources to acquire and/or develop a property project and receive their share once the project is concluded.
3. Rental Income
Another investment idea is in properties that offer substantial rental income. Once again, these can be both commercial and residential. If you’re investing with rental income in mind, it should ideally be in a family-friendly neighbourhood.
Reach Out to Potential Renters
Get a decent house or apartment that needs minimum improvement to keep expenses to a minimum. You can advertise the property in the local newspaper and hold an open house as well. People love a good family area, and homes and apartments are generally rented out the same day as they’re advertised.
Just be careful of squatters, though. You don’t want people that don’t pay rent and occupy your premises. Even though eventually evicted, they are a hassle and waste your time and money. Always get a credit check of your potential renters before allowing them in your house.
Option to Sell
Last but not least, once you feel you want to sell the property, they also go for a reasonable price. With rental value and a house or apartment in good shape, people are willing to pay a little extra as well.
4. Stock Exchange
Most people looking for a safe option avoid the stock exchange due to its volatility. However, if you invest carefully, there is no reason why you can’t earn a good return. The key is to invest in less volatile stocks that pay out dividends regularly.
You will need to study which stocks offer the best dividends. It is also good to shortlist stocks that also gain value over a certain period. Based on history, you can buy the most valuable stocks.
Blue-chip stocks such as Amazon and Apple are pretty helpful. While Amazon pays lesser dividends, its stock value over a period of the last few years have skyrocketed. They can sell for a decent profit any day of the week.
Apple prices have also increased significantly over the years, and the company pays decent quarterly dividends. With its stock price under $200, many people can afford it with ease. It has all the hallmarks of good selling stock.
5. Precious Metals
Investment ideas for precious metals include gold, silver, and platinum and are pretty good options for investments. There are multiple options for entering the precious metal trade. However, like any other investment, you should know its pros and cons.
Gold’s value has a negligible effect based on its demand and supply despite its commercial uses. Primarily used in jewellery making. Gold keeps its value and is not affected by inflation.
However, both silver and platinum prices are significantly affected by the market forces due to extensive usage in the industry.
How to Invest
There are numerous ways to carry out an investment. These include Commodity Exchange Traded Funds, Common Stocks and Mutual Funds, Futures, and Options, and Bullion, and certificates. All these are valuable options and investments ideas, and you should select one, or more, after studying them carefully. Look at Sharesies or Hatch for easy investment options.
Most of the options do not give you physical possession of the commodity. If you opt for bullion, you can do so though you must have some safe holding space for the bar(s). Investing in stocks of precious metal companies, make sure you engage an experienced broker in the field since their stock movement can be complicated.
Word of Advice
Look for a reliable commodities exchange that can help you carry out your transactions. Expert services is a safer bet compared to trying your own hand. Experts can also give you sound advice on options that work better for you.
6. Treasury Inflation-Protected Securities (TIPS)
There are many government and commercial bonds and securities available for investment. Usually offering a decent return, but they’re not protected against inflation, resulting in an actual negative return rate in some cases. However, Treasury Inflation-Protected Securities, or TIPS, are protected against inflation.
Rate of Return
TIPS generally has a lower rate of return on offer compared with the other commercial bonds and securities. Being inflation-adjusted, you will get your principal amount updated based on inflation on maturity.
Long Term Investment
These securities should be a long term investment. Offering their maximum utilization at maturity, there is practically no risk associated with the inflation adjustment. However, choosing to en-cash these securities before the end of the term elevates the risk level.
The Bottom Line
For mums, long-term investments with fewer risks are ideal. The same is true for pretty much anyone without expertise on the financial side. Although the returns in some cases will be lesser than the riskier options, you will get to retain your money and make more on top of it.
So look into the various options such as real estate, mutual funds, and commodities trading. Seeking professional help is also a good idea before you invest your hard-earned money. Taking these steps should allow you to earn the maximum return with minimal risk.
After a while, you should get a good idea as to which option works the best for you. With a combination of expert advice and your own experience, you will be able to make excellent investment choices.
Craig Stobbie is a director at Endura Private Wealth. He is a specialist in transition to retirement planning, superannuation advice, personal investment advice and insurance advice
Craig has been assisting people to make smart financial decisions since 2006. His aim is to help individuals achieve financial freedom.
With your financial goals at the centre of every strategy put in place, Craig endeavours to help clients generate and maintain wealth over time in order to meet their immediate and long term lifestyle plans.
Craig brings over 12 years of experience in the industry. He also holds the internationally recognized Certified Financial Planner™ designation, the highest qualification within the Financial Planning Association of Australia.
Outside of work, Craig enjoys spending time with his family and playing amateur cricket.
You can get in touch with him on LinkedIn, or email email@example.com.