If you’ve got a little bit of extra cash lying around, you might be wondering where you should invest it.
Investing in your future is a great way to build your wealth and ensure that you’ll be comfortable when it comes to your retirement from the working life.
From making the money you have work for you in a savings account to delving into the world of stocks, here are 9 worthwhile investments you should make if you’re looking to build your wealth.
1. A High-yield Savings Account
One of the easiest and smartest ways to invest your hard-earned money is by throwing it in a high-yield savings account. They’re very low risk and come with high liquidity, meaning that your money is usually just a transfer away from your main bank account. Most banks nowadays offer some type of savings account, but interest rates vary so do your research before committing to one.
2. Term Deposits
A term deposit is when you lock away an amount of money with a bank for an agreed upon amount of time. While it’s locked away, the bank agrees to pay a fixed interest rate on the money inside.
The longer you leave it inside the bank, the higher the interest rate will be. It’s a great way to make your money work for you, but only do it with money that you most definitely won’t need soon – in other words, if you don’t have an emergency fund, this probably isn’t the right choice for an investment.
3. Life Insurance
Life insurance is one of the most sensible investments you’ll ever make in your life – even if it never pays off. In fact, all types of insurance are worthwhile investments. Taking care of family is very important, and life insurance gives you peace of mind and ensures they’ll be secure if you unexpectedly fall terminally ill or die.
Without life insurance, your loved ones could be left struggling to pay off a mortgage, car loan, school fees, or even just the day-to-day costs like groceries and petrol. It’s a smart investment to make to take care of your family.
4. Real Estate
For those that can afford it, real estate has historically been one of the best performing investments of the past century. If you’ve got enough spare cash lying around, investing in a property might just be the way to go. But there’s a lot of legwork that goes into this type of investment. You’ll need to do your research to find the right property for you, and if you’re renting it out, you’ll obviously have to undertake all the tasks required of a good landlord.
Despite all of that though, if you stick with this investment, steadily pay off your debt, renovate to increase its value, and maybe purchase a few more properties, you’ll be left with a nice little cashflow by the time you’re due to retire.
5. Invest in Your Education
Whether you enrol yourself in a course related to your career or just decide to learn a new skill on YouTube, investing in yourself is always going to be worthwhile. Completing a course related to your career might open new pathways for promotion (and a big raise). And spending time cultivating a new hobby or learning about something you want to also leads to a more fulfilling life. And that’s what we’ll really remember later in life.
6. Your Retirement Fund
A retirement fund is one of the most important investments you can make. Your employer might already be contributing to this fund for you but making contributions yourself will also help it grow fast.
The great thing about making contributions is that you receive a generous tax deduction on anything you put in, allowing you to get much more out of your money. While not very liquid at all, most retirement funds perform well and offer a good interest rate for your money.
7. S&P 500 Index Funds
An S&P 500 index fund is a great way to diversify your investment portfolio. Your money will be invested in the largest American companies, some of the most successful in the world.
These companies span industries, meaning that you can own a small part of the companies that you really care about. Even though it’s more volatile than your regular bank products, it’s still considered a great option for beginners because of the long-term success of the companies on the list.
8. Nasdaq 100 Index Funds
A fund based on the Nasdaq 100 Index means that you’ll be investing in some of the most successful tech companies in the world – think businesses like Apple, Microsoft, and Amazon.
It’s a bit riskier than S&P 500 index funds because these companies are so highly valued, which means they’ll fall much faster in economic downturns. However, it goes back the other way as well, and with economic recovery these companies will quickly rise in price again.
9. Dividend Stock Funds
Owning dividend stocks is a great way to make some visible profits. Dividends are a portion of a company’s profit, usually paid out to shareholders every quarter. So not only will your stocks likely be rising in long-term value, but you’ll also reap the short-term results with some extra cash in your bank account four times a year.
As with the other stocks, you can buy and sell when you like so this type of investment is liquid. To get more out of this investment, you can opt to have the dividends paid back into your fund, compounding your interest.