Tips to Make Your Money Work for You

Click here to get this post in PDF

Most people are completely new to the investment world, basically referred to as investing virgins. Regularly making payments into your pension plan does not make you an investment genius, all it requires is some basic knowledge. It does not require days of brainstorming to decide.

For some, they can be excellent at handling savings and paying off the debt. But when it comes to investing, they tend to give up very quickly. For people living in the United Kingdom, they have a habit of saving only for specific reasons, and their only source of income is labour.

For all the people starting to learn about investments, it is going to take you a lot of reading and researching to become a beginner. Following are some ways that will help you to make your money work for you. They are,

• Investing in Financial Instruments
• Investing in Luxury Goods
• Investing directly in Business
• Investing in Starting a Business

Tip 1: Investing in Financial Instruments

There are various types of financial instruments made available for you in the investment marketplace. They include,

• Savings Accounts

Savings accounts are the safest ways to stock your emergency funds. They are the means to access your money easily and are usually insured. The major disadvantage of this type of account is that the interest rates that they offer, are very low, as they provide very high safety for the money.

• Certificate of Deposit

Certificates of Deposit are a special type of deposit account, that mostly provide a high-interest rate than the regular savings accounts. In this type of deposit account, a fixed amount of money is invested for a fixed time span. Usually, the longer the period of investment, the higher the interest rate will be. Penalties are imposed if you wish to withdraw the amount early.

• Money Market Deposit Accounts

This type of account particularly has higher interest rates as compared to savings accounts. Just like the savings accounts, they provide easy access to the money and are generally insured. Most services that are offered by a checking account, are provided by this type of account. However, there is a restriction placed on the withdrawal amount and the transfers that you make in a particular timespan.

• Stocks

You own a part of a company’s assets when you buy stocks from them. If the company performs well, you receive periodic surpluses or you can opt to sell your stocks to earn a profit. If the company underperforms, the stock prices decrease and you may lose some or all of your money, that you have invested in that company.

• Bonds

A bond, by definition, is a certificate of debt issued by the government or the company. It promises to pay a specific amount of money at a forthcoming date and carries interest at a fixed rate. The term that a bond states can change (from a few months to 30 years). Since they are tradable instruments, they are usually safer compared to stocks, as the bondholders are paid before stockholders in any company that faces bankruptcy. See here for more details on what is a convertible bond.

• Mutual Funds

A mutual fund is moreover a professionally managed pool of money, from a group of investors. It is the responsibility of the mutual fund manager to invest your funds in securities like stocks and bonds, and the other available options. The investments made are based on the fund’s investment objectives. Most mutual fund plans in the market, charge fees and you are responsible to pay taxes on the profits that you make.

• Annuities

Annuities are contracts that are sold by insurance companies. They are designed for the purpose to make payments to the consumer indefinite intervals, mostly after their retirement. The money once invested, cannot be withdrawn (penalties may apply if withdrawn) till the specified age. Taxes are applied during the withdrawal process. As a matter of fact, they are safer comparatively and are low-yielding investments.

Tip 2: Investing in Luxury goods

Making investments in Luxury good refers to investing in arts, wine, jewellery, and vintage cars. In other words, it is making an investment in the better and finer things in life. To conduct this procedure successfully, it is essential that you have deep knowledge of it, as every time you make an investment in an art piece, you are betting that its value will increase over time. People who are specialised in this particular field acquire an understanding of it. But overall, this type of investment can make your investment portfolio interesting.

Tip 3: Investing directly in Businesses

Risk is the reason why most people fear from making investments. What they do not understand is the fact that the observation of risk is associated with the level of control. In simpler words, it means that the lesser control that we have on something, the higher a risk we believe it to be. People are more concerned about losing their money in stock markets since humans do not have control over what will happen next. Most of the times, people tend to acquire incorrect information or tend to pass on incorrect information. Therefore, you start to worry about things when you invest directly in local businesses. But, since you have control over it, the risk factor reduces eventually. Of course, there are chances that you may fail. To avoid this, or to reduce the chances of failure, you need to be smart in selecting the businesses you invest in.

Tip 4: Investing in Starting a Business

To be very honest, it is not an easy task to start a business overnight. The thought itself is scary, and most people avoid it as much as they can. The pros of starting a business are that you have complete control over how your business is developing. But the con of starting it is, that if anything goes wrong there is nobody to blame but yourself. A lot of business start good but due to poor quality of their services or failure in acquiring quality mark for their business make them run into trouble and eventually they fail to sustain in the market. This is why it is important to not to overlook the quality aspect of your business. And therefore at the time of investing you should also opt for SQM consultancy so you can be assured of your investments being put in a business powered to sustain for long.

On the other hand, investing in starting a business is the most satisfying and profitable investment that you make. Moreover, to avoid the pressure, try and turn your passion into a business. That way, it will not be something you will be doing for the first time, rather have the utmost knowledge of where the decisions you make will lead you. The only pressure you might face is the amount of time and hard work that you have to put into it, to make it successful.

But if you are starting a new business, you need to initially start with coming up with an idea and a possible practical way to execute it. Coming up with a business idea is an easy thing, the difficult part is finding practical ways to execute it. But if you are sure about investing in starting a new business, execution of ideas can be mastered. In the end, it is all worth it!

Article by Alfie Miller

You may also like: 5 Things You Need To Do Before Investing Your Money