BPTIM - Best Place To Invest Money

Best Place to Invest Money

Before we get started let’s be clear that this is not the definitive answer to where you should invest your money but rather some concepts that have proven very successful for others who have take the investment plunge.

For many, the notion of investing even a relatively small cash sum can be daunting.  It is common for people to opt for the assumed security of storing money in cash savings accounts instead.  While it is certainly true that this route does not involve the kind of fluctuations associated with true investment, it is worth thinking about the advantages that the right investments have to offer.

In fact, the decision NOT to invest can end up costing thousands, possibly millions, in the long term, which is why so many people are now choosing to place their cash in stocks and bonds, equities, property, and commodities.  If you feel like it could be time to find your own BPTIM (best place to invest money), take a look at some of the following tips.

5 Worthy investment ideas

Here’s 5 popular investment options open to investors.  They vary in risk profile.  They are as follows:

1. Commodities (oil, gas, metals, food products)

 

2. Cash (regular savings accounts)

 

3. Property (commercial or residential)

 

4. Bonds (a loan to state or an enterprise)

 

5. Equities (shares in a company like Apple)

An important thing to keep in mind is that typically the greater the risk that an investment option carries, the larger the potential profit you could reap in the long term.

The third option, cash, is generally believed to be the safest option of all.  However, in line with the above outlined rule, this means that it usually offers the lowest possible profit too.  The decision to invest in bonds is a slightly more risky, but typically much better terms than a savings account or CD (certificate of deposit)

As for property, this option tends to perform rather robustly over prolonged time periods, and can end up offering very pleasing returns. The potential profit from equities and commodities is highest, but these two options also carry the greatest degree of risk.

Actively Managed Funds

Here are several investment ideas to consider.  Each of these has a certain level of risk.  Anytime you have a manger who is in charge of your investments you should experience less volatility and more reward, especially because they charge a fee.  With so many options out there if you find a great financial adviser they can be worth their weight in gold.  However, with enough due diligence you can do it on your own and even do better.

If the notion of selecting stocks leaves you feeling anxious, you should be reassured by the fact that, with actively managed funds, there is a fund supervisor employed to make all of the major judgments on your behalf.  This includes which areas of the economy to take a chance on, and which enterprises have been underrated by others, but now seem set for future success. They can help you find the best bond funds that may be a good, safe part of your portfolio.

Yet, it is still important to be cautious when considering this investment option, because it does come with additional expenses.  The average actively managed fund requires a yearly sum of 1.26%, but there are some mutual bond funds which carry a rate of below 1%.  The trick is to spend some time searching for the best options.

ETF

Exchange Traded Fund -  This investment option shares some features with mutual funds, however, there is no overarching supervisory component here, so you will not have any extra support.  If you plan to invest using this approach, you must be more on hands with your portfolio.

Index Funds – this investment option does not come with a chance to best the market, but it does allow investors to keep pace with it.  In fact, index funds are often considered to be one of the best options available, because they provide access to thousands of different bond and stock options, for a relatively small expense.

Junk Bonds – a lot of investors tend to suffer from a narrow perspective, which settles on short term bonds.  However, this option offers reduced potential profits.  On the other hand, high yield bonds (or junk bonds) can be extremely lucrative, just as long as your exposure to risk is managed and appropriate.

Shorter Term Investment Options

Online Savings Accounts – if you are looking to be able to access your cash at any point, a savings account is really the only suitable option.  While interest rates for this investment option are very low at the moment (only around 1%, in some cases), they do offer the best potential profit in relation to the sum saved, particularly in comparison with alternative financial institutions.

This kind of short term investment option shares some similarities with certificate of deposits (or CDs), but with the added benefit of no early release fees.

Certificate of Deposit – for investors working with a time frame of five years or less, it could be a better idea to place cash in a CD with a maturity deadline that is in line with your own financial objectives.  In fact, this is a perfect route if you are determined to avoid risk wherever possible, because CD’s are protected by the Federal Deposit Insurance Co.

A maximum of $250,000 is protected by the FDIC, but it comes with a cost. The protected money cannot be prematurely withdrawn without early release charges being incurred.

Money Market Accounts – a money market account also comes with protection from the Federal Deposit Insurance Co., but the difference here is that cash can be accessed at any point.  It is important to remember that interest rates are usually inversely linked with ease of availability.

In other words, if you would prefer to have unhampered access to your money, you will have to tolerate reduced rates.  For investors who can handle having a lump sum made inaccessible for a clearly defined time frame, an increased rate will be offered.

The decision to invest any sum of money can be a daunting one, because the very nature of investment relies on the presence of risk.  If there was no danger, there would be no reward, and it is very important to keep this in mind when searching for your own BPTIM.

To your everlasting wealth!