It is an understatement to say that investing can seem overwhelming – especially if you’re new to it.
One minute, an opportunity that seems like a “sure bet” comes up short. The stock market fluctuates by the minute. So much of it is beyond your control. How does one know where to begin, let alone how to slowly but surely build a viable portfolio for oneself over many years?
Thankfully, the situation isn’t necessarily as complicated as it may seem. Whether you want to take the wealth you already have and grow it, plan for retirement so that you can enjoy the lifestyle you’ve always seen for yourself, or have some other specific goal in mind, there are a number of methods that you can start using today that will provide a solid foundation for embarking on a successful investment journey.
The Art of Wholesale Real Estate Investing
One opportunity to build wealth that many find success with is investing in wholesale real estate. This is when you don’t necessarily purchase a property (typically distressed) yourself. Instead, you connect a seller and a buyer. You agree to a price with the seller, then agree to a higher price with the buyer, and the difference between the two goes into your pocket.
Of course, traditional real estate investing also represents a viable investment method. In addition to being a great way to generate passive income, investing in something like rental properties gives you long-term appreciation in your favor. Unless something drastic happens to the market or the property is allowed to fall into complete disarray, typically, the value will always increase, so when it does come time to sell it, you’ll make a tidy profit.
As always, it’s important to conduct thorough research into not just a property before you purchase it but also the area in which the property is located. Complete your due diligence to help make the most informed investment decision possible.
The Long-Term Impact of Bonds
Another great way to get started with a larger investment strategy involves bonds. Many beginners, in particular, find them ideal because they offer a chance at a predictable income stream. Usually, bonds pay out interest twice per year, for example.
Plus, if you hold the bond to maturity, you get back the entire amount you initially put into it. So not only do you get to collect all that interest over a long period of time, but you also get the original principal back at the end.
Bonds are also a great way to counterbalance some riskier stocks you may hold with something more stable.
The Stock Market
Investing in the stock market is the method that most people are familiar with, at least in passing. On the surface, it does check a lot of important boxes. If you’re successful, you’re guaranteed a return on your original investment – often a sizable one. It can be used to build wealth over time, thus allowing you to accomplish whatever long-term goals you set for yourself. If you diversify your portfolio, it can also reduce your overall risk as well.
However, as is true with real estate, you must conduct extensive research before choosing which stocks to buy. Don’t go based on names, “hot tips,” or gut intuition. Do your research and purchase stocks you understand and believe in for the best results.
Why Mutual Funds Matter
Finally, we have mutual funds. These are a collection of different securities, with stocks and bonds being two examples. They’re all combined into a single, convenient package.
One of the biggest benefits of this is undoubtedly risk reduction. It can be a perfect opportunity for you to invest in some riskier stocks in a way that is protected by every other security in the mutual fund. Mutual funds are also a convenient, easy way to start investing without putting in much of the abovementioned legwork. Most mutual funds are also known for their fair pricing, making it an ideal way to get started for many people.
Diversification and Forward-Thinking is Key
Ultimately, these are just a few ways to invest and build wealth over the long term. But the key takeaway is that your decisions must be forward-thinking. Don’t invest in something because it “seemed like a good idea at the time.” Invest because you have laid out clear, actionable financial goals for yourself, and this particular move puts you farther down the path toward achieving them.
Likewise, you should continuously diversify your investments whenever possible to ensure there is no “single point of failure” that could wipe out the value of your portfolio. The more diverse your investments are, the more protected they are. This also means you won’t choose just one of the avenues mentioned above. Developing a strategy that works for you will likely require a combination of them.
If you need help putting together an investment strategy, it’s a good idea to consult professional advice. Seasoned experts can ensure you have the actionable, analytical information you need to make the more informed decisions you can every step of the way.