It’s time to redirect your attention from playing safe and struggling with getting pretty low interest rates to some really profitable assets which may multiply your money quickly!
If your investing ambitions are high enough we presume you are fine about taking certain level of risk, which is obviously higher than during investing in safe assets (like T-bills, CD, savings account, etc.).
There are few ways of investing the money for short and long term in order to get a really fat return. Needless to say but you should always follow money management rules. First and foremost rule is never ever put all the money into high-risk investments. At least one-third of your money should be safe in case your high-risk investments fail. Learn more about wise money management in investing to keep your finances protected while making them grow.
Real Estate Investment Trusts
REITs (Real Estate Investment Trusts) invest in Real Estate and they are traded on a stock exchange just like any other stocks. What makes REITs attractive for individual investors is that Trusts provide them with an opportunity to invest in expensive commercial property, gathering money from the pull of investors. Due to special tax regulations, Real Estate Investment Trusts deliver investors really high yield along with high liquidity of investments.
There is also an option to invest in property individually, but it will require way larger investments while there is always a risk of property’s depreciation.
Investing in stocks is the most common way wealthy people use to double the money. Stocks are traded in the stock exchange and due to price’s fluctuation investor may earn or lose. When the Company (which stocks investor has bought for his portfolio) announces big deals, acquisitions, mergers or innovations, price may jump significantly, bringing terrific profit. Investing in stocks of big companies (like Microsoft or IBM) is great for long terms, as stocks of such giants is less likely to drop, but instead an investor will see a slow, gradual yet stable uptrend.
Buying stocks of companies which are the newbie on the market is too risky, but yields may be explosive as well (especially in tech and pharmaceutical sector).
Corporate Bonds (High-Yield Bonds)
Unlike government bonds which offer a very low yield, some types of corporate bonds are purposed to bring high income at the cost of a high probability of default. Companies, which show stable financial performance, are never run out of investors, so they issue corporate bonds with the low interest rate, but companies who don’t have good credit ratings need to attract investors by higher-yields. The correlation is direct: the higher yields are offered the higher the risk of investments’ fault.
High-yield corporate bonds are sometimes compared to roulette; nevertheless, if you are after fat profits, you will have to face risks anyway.
Master Limited Partnerships (MLP)
Master Limited Partnerships are somewhat similar to Mutual Funds, as investors buy pieces of bigger investment or businesses (units), in order to share the income later.
Unlike mutual funds where money is invested into financial markets, MLP operates certain business ventures and get the profit for it. Receiving cash flow from business operations MLP share it with its partners (investors), according to the amount of investment being made by each investor (unit holders). The risk lies in a probability of business failure or temporary operational loss (or even company’s bankruptcy). Read more about investing in Master Limited Partnerships with high yields.
Options are among high-risk and potentially high-yield investments which have certain specificity. Options are considered a very risky financial tool only if you are trading them with speculative purposes. Surprisingly, options are often used as a way of hedging risks while trading stocks or commodities. There are “put” and “call” options which mean you, as an investor, have a right (not an obligation) to buy or sell the asset before or on a determined date. The concept is simple, if the option you’ve bought shows an appreciation of the price of the asset, you will get a profit. There can be stock options, precious metals, and currency options, etc.
Initial Public Offerings (IPO)
When the company goes to an open market and a stock exchange, they undergo a procedure called Initial Public Offering, which means their stocks are offered on the exchange for the first time.
It’s often unpredictable how the market will react on the IPO of a certain company, so investing in IPO is risky. Still, the potential profit may exceed all expectations, as initially stocks are offered (normally) at a moderate price while the price may jump up crazily in just a few months after. Needless to say, but the price may plunge as well, so the disappointment is highly probable.
Foreign Exchange Trading
Foreign Exchange (or Forex) is, probably, the riskiest way of investing, but results may triple your money just in hours. Usually, forex trading is all about speculative buys and sells, due to currency prices being highly volatile. It’s an adrenaline-infused investment and the risks are enormous, especially during the periods of the most intense prices fluctuations. Read more about investing in foreign exchange market in comparison with investing in real estate, to be armed with a solid knowledge.
Mutual Funds gather investments from individuals and companies in order to make beneficial deals (usually on financial markets). Earned profits are shared between investors according to the amount of investments each participant has made.
Investment portfolios are ruled by the managers – financial experts hired by mutual funds. Managers earn money for the investors (getting fees for this), taking decisions about directing the money into certain deals. Mutual Funds are considered moderate risks investments with potentially high returns.