With the cost of living becoming even more expensive, many individuals are now looking to make the most out of their savings and earn some added income. Alongside a full-time job or owning a business, it is becoming the norm to invest money and make a profitable return. Of course, making an investment does come with an element of risk, but on the whole, the benefits of investing completely override the risks, providing the right decisions have been made beforehand.
Whatever the reason for making some extra income, whether to fund a medical emergency or college fees, here are some profitable investment options you could consider.
1. Peer to Peer Lending
Peer to Peer lending (P2P) is a greatoption if you are looking to make a short-term investment. Instead of merelybuying shares in a company, you are lending your savings to a business owner with the intention of them paying you back with a very high interestrate. It could be comparedto putting your money straight into the bank, but instead, there is the risk of losing the money you have invested.
P2P lending means cutting out the middlemanout (the bank) and making a direct investment with the borrower yourself. On some occasions, you are able tochoose who you wish to invest in, but on the most part, the cash is spread out amongst a variety of firms. What is beneficial about P2P lending is that you can start off with a very small sum of cash if you aren’t too comfortable with a large amount initially, as well as having the opportunity to spread your investment out across a range of borrowers. The latter will give you a better chance of earning back what you have lent out, as putting all your eggs in one basket by investing in a single business could leave you at a loss if the company faces financial difficulty.
On most occasions, the higher interest rate you are offered in P2P lending, the more risk is involved.
2. Technology
As we are becoming heavily reliant on technologies, it seems that new forms are constantly being churned out to keep up with the huge demand. It goes without saying that some innovative technologies are changing the world as we know it.
For these innovations to become a reality, companies with the initial ideas are in desperate need of investors. With concepts such as driverless vehicles to cancer detection and prevention technologies, to picking and packing machines, the technological age is well and trulyupon us, but all that is needed is the funding to kick-start the process.
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3. High-interest savings account
If you are looking for less risk than peer to peer lending, you could always consider investing your money into a high-interest savings account. By doing so, you will be earning a decent amount of interest just by storing your money in a particular place that won’t require much, if any, effort from you.
One of the first steps for this type of investment would be to choose a bank that has a good reputation. They should also provide easy access to online banking, so investors can browse through their savings at their ownleisure and providea good level of customer service, in which an advisor is available to chat at any point, should there be any concerns.
4. The stocks and shares market
With those who have a large sum of cash to play with, investing in the stock market would be a valuable option, providing the investor doesn’t mind the substantial element of risk that is involved! Stocks go up and down in value on a regular basis, so this option may not be suitable for those who worry about their finances.
Before making such a significant investment, you first need to consider how long you are prepared to keep your money tied up for. Are you looking to achieve long-term or short-term goals? If you are going to need these funds in the near future, it may be best to browse other types of investments, as the stock market is extremely unpredictable, with no certainty as to when you will be able to access your initial sum and the added profits.
Investing in shares involves pooling your money into a company, in the hope of a good return. Companies offering this opportunity to investors believe they have a secure financial future and wish for the investor to also revel in success.
It would be advised to invest for at least five years to conquer the unsteadiness of the market and truly get a good return on your investment. Similarly to stocks, if you believe you may need access to the money within that time, this route may not be the best idea for you.
To make the most out of shares, it would be wise to invest your money into a pool of different companies so that if one happens to land itself into financial difficulty, you won’t have lost all of your money. Many investors also try and time the market as to when would be best to make an investment, but even those who are the most experienced in the market can make big mistakes. In fact, it is impossible to predict. However, instead of investing all your money at once, you could try the tactic of ‘drip feeding’ which involves making investments in shares on a regular basis.
