If you’re new to investing, it’s natural to feel overwhelmed. There are many options, and the risks of investing may be intimidating.
But if you invest wisely, the risks may pay off, literally.
You don’t have to be rich to invest. Even those with only small amounts of money have options. And by investing even a small amount of money, you may be able to grow your wealth.
Here’s a look at why you should consider investing and what investment options you have.
Why Invest?
Investing, when done wisely, enables you to build wealth and save more than you would otherwise. That’s because investing can combat inflation.
If you were to hide your money in a vault or put it away in a traditional savings account, your money would earn little interest, and inflation could decrease its value over time.
By investing, on the other hand, your savings could outpace inflation, meaning that in the future, you could be able to afford the services and goods that you can now.
Risk Tolerance
It’s important to point out, however, that investing can be riskier than putting your money in a vault or traditional savings account and that different investment and savings options come with different risks and returns.
When deciding whether to invest and what to invest in, it helps to know your risk tolerance.
Generally speaking, the larger the potential return, the more significant the risk.
But that doesn’t mean that investment products on the safer side of the spectrum don’t come with potential returns or that the more money you have, the more risks you should take.
For instance, many beginning and experienced investors will buy gold or buy silver online in the form of gold and silver bullion. These are considered safe-haven assets, meaning assets whose value tends to retain or increase during times of economic instability when the stock market is even stormier than usual.
Portfolios
Investing in hard assets like gold and silver bullion is one way to diversify your portfolio.
Why would you want to diversify your portfolio?
The best diverse portfolios include a range of assets that minimize risks and maximize potential returns, making them a recipe for potential financial success.
Diverse portfolios include a range of investment products, for example, safe-haven assets as well as stocks.
Stocks
Stocks tend to be on the riskier side of the spectrum. When you invest in a company’s stock, you may make capital gains when the company does well, but you may lose money when the company does poorly.
It is tempting to want to sell and buy stocks quickly, but individual stocks can prove to be prudent long-term (5+ years) investment options. That’s why taking what’s called a “buy and hold” approach to investing in individual stocks can be more financially rewarding than the alternatives.
Buying an individual stock can mean buying a portion of a company, and if that company does well over time, you could see very high returns.
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