If you want to grow your wealth you need to invest. Significant growth in income happens when you go from just earning money or making a profit to increasing the rate at which you earn it. Investing your money is a way to ensure that you not only earn more but what you earn will beat inflation. Here are some ideas on ways you can make money to work for you no matter how old you are.
1. Become a Landlord
Acquiring property to rent out and receive a passive periodic income stream is one of the greatest traditional investing staples. Many of the expenses on rental property are tax deductible which is still an upside to a downside.
When you become a landlord you also get to tap into the power of equity that property ownership avails to you. Basically, you can increase the amount of capital available to you through loans secured by the equity you own on your property. On top of that, the value of the property will appreciate over time. As a landlord, you get to earn more value surpassing the purchase price you paid for the property all while earning a periodic income on it.
It must be said that while becoming a landlord sounds easy enough, you need more to succeed. Arguably, you will need patience more than capital to give your property enough time to get occupants. Maintaining rental property calls for time, attention and patience. You can opt to handle maintenance work on your own and always be on call. Alternatively, you can outsource it to property managers who will handle it for you at a fee. Check out pumpedonproperty.com if you are looking for a competent property management company.
2. Invest in Government Paper
When it comes to investing, many people look to reduce their risk exposure as much as they can. Whether it is due to a need for portfolio diversification or simply being naturally risk averse the need for investment stability is prevalent.
Exchange-traded Australian government bonds offer an attractive investment avenue. These bonds are debt securities issued by the Australian government, therefore, the interest and principal invested are paid by the Australian government. Security is therefore guaranteed on your investment. You can also sell these bonds anytime on the Australian Stock Exchange (ASE).
3. Take up a Real Estate Investment Trust (REIT)
A Real Estate Investment Trust (REIT) is a company that owns real estate and allows investors to take up ownership stakes in return for a dividend. The greatest allure of a REIT is that it allows you to tap into attractive real estate returns (as a passive income stream) without having to own the property itself.
There are publicly traded (bought and sold on the stock exchange) and private REITs and each carries its own risk profile. For new investors or risk-averse ones, a publicly traded REIT is recommended.
4. Stocks and Bonds
Public companies offer their shares on the stock exchange for wholesale or retail investors to buy. You can invest in companies that you think have sound fundamentals by taking up their shares. Why the stock market can work for both short and long-term investment it is the long holders who receive the most value.
Holding onto a stock for the long term as you receive dividends has the potential to see your shares appreciating in value. Public and private companies can offer commercial notes like corporate bonds for investors to take up. You can invest in these notes and receive a return after a specified time window.
5. Put Your Money in Fixed Deposit Accounts
A fixed deposit account is an account operated by a regulated commercial bank where you put a particular amount of money in for a specified period. The one differentiator of a fixed deposit account is that once you put the money in, you can’t take it out before the period you agreed to ends.
Some commercial banks allow premature withdrawal but charge a punitive penalty to discourage the habit. The interest in this account is higher than for a regular savings account.
6. Join an Online Real Estate Platform
An online real estate platform is an online company that matches property developers to investors. Financiers put in debt or equity capital and receive a return on a monthly or quarterly basis after paying a fee to the platform.
If you do not have significant capital to invest in directly owning property, you can invest with what you have or are comfortable with. Note that the property holding you would invest in isn’t as liquid as with a REIT. It is essential to determine your holding period to determine if it’s viable for you.
7. Buy Distressed Assets
Distressed assets are assets that are under threat of auction due to the owner’s failure to pay the debt on them. As an investable asset class, they aren’t as widely known as other options but they nevertheless offer a tangible opportunity for notable returns on investment.
You can shop around for assets forfeited to the bank by their owners and which are put up for auction. These assets are typically sold under market value to incentivize their purchase. You can, therefore, buy an asset, improve its value if necessary and then sell it on the open market at a markup.
The other class of distressed assets you can purchase are businesses on the brink of failure. Contrary to popular belief, not all companies that are about to collapse are due to a poor business model. There are many good businesses with sound fundamentals that serve a market with a steady outlook but fail due to poor management.
You can invest in identifying and purchasing such companies at a significant discount since it will be a fire sale. Once you invest time and money in bringing the firm back to health, you can keep it to earn a profit or sell it at a markup. Private equity companies and hedge funds are known to make returns many times on their investment through his strategy.
Investing your money can help it grow at inflation-beating rates. There are various options available depending on your risk appetite and personal context. Survey the market to find an option that delivers the best rates for you without overexposure to risk.