Average Joe investing: What are the options?

by Mike on December 21, 2018

Average Joe investing: What are the options?

Once upon a time most people would stick their money in a bank account and forget about it. After all, this was seemingly the easiest way of making a good return on your money, wasn’t it?

Well, we’ll leave the debates about saving rates and inflation for another day, but the main message is that with interest rates dropping to significant lows over the years, it means that a lot more attention has been honed in on the best places to “put” your money.

This is what today’s article is all about. Fortunately, you now don’t have to be a financial whizz to really make your money work harder for you (rather than the other way), and through the rest of this post we will take a look at four options which are open to you.

Method #1 – Investing in stocks

There’s no doubt that there is a lot more risk when it comes to this first option. After all, if the company you have chosen to invest in starts to perform poorly, all of your money can be at risk.

Nevertheless, on the flip side the returns can be through the roof. In short, there’s no ceiling here, and if a company performs particularly well you could receive a huge windfall.

It could be said that investing in stocks has come easier than ever before for the Average Joe as well, thanks to various pieces of software that aim to simplify the process somewhat. Try and download MT4 to see such software in action.

Method #2 – Mutual funds

Next on the list are mutual funds. It could be argued that these are slightly less risky than the previous option, as you are at least having a professional invest your money on your behalf. This investor might decide to invest in stocks, bonds or other investment types.

As well as having the benefit of having a knowledgeable professional invest in your behalf, let’s not forget the diversification-factor that is brought into play with mutual funds. In other words, all of your eggs aren’t in one basket, and if one stock does happen to underperform, others in your fund might compensate for this and keep you profitable.

Method #3 – Bonds

We touched upon bonds in the previous section, but in short they are far less risky than stocks. These are effectively loans to a company, who in return will pay you back at set intervals with interest.

There is of course still a small element of risk with bonds, while it should be noted that the returns are provided in accordance with interest rates. However, as it tends to be governments who issues them, a lot of smaller investors tend to prefer them and appreciate their security.

Method #4 – Real estate

The final suggestion isn’t quite as flexible, in relation to the fact that you will need a bit more capital to start with. Nevertheless, in a lot of countries real estate is all but guaranteed to increase in value, and this means that it’s a great investment for those that want to pledge their money in this way. Let’s not forget that as well as appreciating in value, a lot of real estate tends to yield very good returns from rent. It means that you can almost win in two ways.

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