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Using the popular 50/30/20 budget management rule to divide monthly income smartly and efficiently or putting 30% of this sum in the savings jar is guaranteed to back you up in emergencies. If you’ve been sticking to such a sound financial habit, you can take pride in managing your finances correctly. However, having large amounts of money aside in savings is not all there is to do to make you a savvy budgeter. Those money are lying dormant and devaluing in time due to inflation in a percentage of around 10, and you likely don’t want to see your efforts worth less and less down the road. In the U.S., for instance, the prices are up by around 3.7% compared to the same period last year, and inflation has recently hit 3.70%, up from 3.67% last month. You should consider investing your currency to protect your wealth from depreciating and even putting it to good work and seeing money multiply, especially when some methods such as looking into the bitcoin price today and quickly grabbing it are as easy as ABC.
Here are three of the most popular investment tools that newbies leverage at the beginning of their journey, as well as a well-known method of managing investments if you have no interest in handling them by yourself.
Bitcoin
Cryptocurrencies have not entered the financial space long ago, especially if you take stocks and bonds as comparison etalons. However, it’s safe to say that they’re just as widespread, notorious, famous, and rooted as many other lengthy investment options like the two. The concept of pseudonymous, cryptographic, and digital currency whose value is mainly guided by investors’ demand and the supply provided is anything new. Yet, Bitcoin turned what seemed like a cyberpunk’s dream into reality when it was launched in January 2009. Everything that followed after the youngest cryptocurrency’s release was just a natural consequence of introducing revolutionary technology and making it easily usable by almost any ambitious and savvy developer.
Bitcoin is reputed as the safest cryptocurrency to invest in since this crypto leader is unlikely ever to be dethroned by any other cryptocurrency, despite all the debate surrounding the “flippening” or the moment that the second-best crypto overtakes the main one. Bitcoin proved times and times again that its value is unshakeable, showing resilience during the most challenging economic times and regaining its value gradually while the storms were dissipating. For the moment, it is thought to be witnessing a period of consolidation after slowly rising to a value of over $36,000. If Bitcoin keeps showing positive behavior, as many pundits believe it will for the following two weeks, it might surpass the $40,000 threshold. However, it’s paramount to remember that these are just widespread speculations and approximations based on a well-monitored historical chart. When choosing to explore the volatile cryptocurrency market, the best strategies involve:
- Investing a modest sum.
- Sticking with a long-term approach.
- Going with the best-established crypto, namely Bitcoin.
Mutual funds
Don’t know what investment to pick or want to diminish the risks involved in a single type of investment but are impeded by the lack of expertise in the domain? Then, you may want to consider opting for mutual funds.
These are like a combination of investments, removing the need to carefully choose one or two investments that would eat the entire budget. Instead, investors can skip the part where they choose individual bonds and stocks, for instance, and get a whole load in a singular transaction. Investing in diverse mutual funds reduces the risk of adding individual stocks to one’s financial holdings.
Either index funds or professional funds generally manage mutual funds. However, the former is a type of fund based on the behavior of a particular stock market index, such as the FTSE 100 or S&P 500 Index. It’s a preferred choice for those who aren’t comfortable with the fees charged by actively managed mutual funds as they’re removing the involvement of professional management.
Bonds
Imagine being promised a fixed return on an investment that you receive regularly at a pre-established date, escaping all the unpredictability and instability that some assets involve. Then, you’d like to be more confident in putting your money on the table.
This is the case with bonds, also known as loans made to government entities or companies that pay interest on your given money. Just like your credit mechanism, they’ll have the obligation to repay your money in a specific number of years. These usually involve a lower risk than stocks, futures, commodities, and other alternatives. However, they don’t make room for significant returns like crypto and other volatile assets, so make sure you don’t allocate them too much space but rather spread your money across more investments.
Don’t want to get down and dirty? Consider trying robo-advisors
Deciding it’s time you put your savings to better use and investing them in potentially profitable financial tools is always easier said than done. For what’s worth, you can decide relatively quickly on the investment routes you’re most confident in. Still, the same isn’t always applicable to the strategy and approach you will adopt after the assets are added to your portfolio.
Say you’ve succeeded in saving a decent amount to pour into something bigger, but you’d rather wash your hands of the entire process of investing. You’d love to have a financial manager like a broker or consultant do some dirty work for you, but their help and expertise come with a high cost that takes the form of irrecuperable expenditures. Fret no longer! There’s actually something you can do, and that is opting to use robo-advisors.
As the name suggests, robo-advisors are services that use software that’s reliant on software and computer algorithms and can make the whole experience easier and more accessible. They can work in numerous financial domains, such as cryptocurrency, bonds, stocks, ETFs, etc. These computerized tools typically charge between 0.25% and 0.50% of your account’s balance yearly, which is considerably less than the price perceived by human investment managers. Furthermore, some providers can also allow you to register and open an account pro bono.
Suppose you want to develop your investment knowledge and skills and could use some help to speed things up. Robo-advisors can also prove helpful in this growing stage if you opt for some that provide educational resources and tools. It’s only a matter of dedicating a little time to finding your suitable option!
Closing words
Aren’t the investment tools enumerated above piquing your interest? Then, you’ll always have stocks, ETFs, and other noob-friendly investment options to explore! Just make sure you’re not overspending and raising your hopes so high that you end up disappointed if your investment strategy doesn’t deliver the expected results.
