Are you new to the investment world and looking for the best way to make returns on your money? This could be to top up your current income, add to your pension pot or to start a business. Whatever the reason, there are a multitude of investment options out there, from stocks and shares to property and many more. Knowing what to do with your money and where to invest it can be difficult, which is why we have put together this guide for you on some of the most popular types of investment as well as the pros and cons that are involved, to hopefully see you receive the best returns in the future.
Investing in Property (Pros and Cons)
Property is often considered more reliable when it comes to investing, and although a long-term investment it can offer you returns from day one, as well as multiple income opportunities. Sometimes house prices will fluctuate but generally, they are on an upwards trend and are a reason why many investors deem property to be a more stable market to invest in. the main downside to property investment is that you usually need to have a substantial amount of money to get started, but the initial investment can be worth the rewards in the long run.
Successful property investing typically relies on two things; the location which will determine your returns, and the market itself, which may be out of your control but you can make calculated decisions on when is the best time to invest. If this is the route you decide to take, you will more than likely want to consider a buy to let property in an area with high rental yields. For more information on this type of investment and details on prime places to secure your asset, check out online guides such as those from property experts RWinvest who can help you get started.
- Property is considered a stable and secure investment with little or no risks involved.
- The returns are high as long as you have completed your research.
- A property is an asset which means it will only gain value over time. Unlike money sitting in a bank account (with little to no interest being generated), you accrue value on your property every day.
- Usually, you will need a large down payment to secure a property.
- Hands-on investment strategies are not suitable for everyone.
Investing in Stocks and Shares (Pros and Cons)
By investing in stocks, you will essentially own a share of a company or asset. As there is no upfront fee required, this can be seen as a more accessible way to start investing, although the market is much more volatile when compared to property and so can come with greater risks. Investors of this generation turn to stocks not just because of the great returns, but due to the advances in investment apps allowing you to research and monitor investments straight from your phone.
- Liquid assets can be sold easily to generate quick profits, offering additional cash flow to invest elsewhere.
- Profit increases allow investors to see up to 50% growth over the course of a year.
- Hands-off investment, making it one of the most effective ways to earn passive income, as you can secure a percentage of the profits from a company without having to do a lot of work.
- Volatile investment as from time to time companies may struggle financially making your shares less valuable.
- Price fluctuations can vary from one extreme to another. As shares continue to be sold, price negotiations are in a constant flow of change and so a long-term overview of a company is not taken into account.
- The threat of bankruptcy can be caused by investing in shares, especially during a recession if the company goes into administration, and you could risk losing your initial investment as well as any potential profits you were due to be paid.