There’s a definite attraction to the idea of making the big bucks with as little effort as possible. It’s a trait universal among human beings, and it also accounts for the reason ready-made food or the smartphone, for that matter, have stormed the market. As a rookie income-seeking investor, the first question you’ll ask yourself will be ‘What’s the best way to invest money with a low risk and a big payback?’
Below we’ve listed a number of methods, from the safest to the less so. Some of our advice comprises a little bit of extra homework on your part. Firstly, you should hone your entrepreneurial talents before plunging all-in with a full portfolio. Most importantly, don’t ride the single-option roller coaster. Be creative, diversify, and if it sometimes happens you fail, learn from your mistakes.
The Best Way to Invest Money Out of 5 – Choose Your Arms
1. Take the First Steps by Yourself
In your spare time, you can teach yourself how to invest. if you’ve always been inclined to DIY tasks, the best way to invest money then could be for you to take full control of the reins. As long as you’re going for such a daring plan, before you invest your money, first invest your time.
Don’t rush into pledging your money without a little bit of know-how in advance. The stock market is not going anywhere. On the contrary, it will probably endure past the collapse of the planet as we know it. When Benjamin Franklin coined the famous words ‘In this world nothing can be said to be certain, except death and taxes’, he should have added the New York Stock Exchange as well.
For example, you can hone your skills using an online trading platform such as Scottrade. Brokerages such as Scottrade offer test accounts with play money, so you can learn how to ‘ride the bicycle’ around Wall Street. At first, it will probably feel like binge-gaming on Monopoly, obviously with higher stakes. Virtual trading with stock simulators will take some of the pressure off when you make the switch to trading with real capital.
Alternatively, diversify your reading material and pick up a book on stock trading like How to Make Money in Stocks by William O’Neil. it will introduce you to Wall Street lingo and investing practices.
2. Take it Snail-Speed Slow
One rule of thumb as the best way to invest money is the rule of 72. Perhaps the most tested method to double your money, the 72 rule means non-speculative, solid investing through blue-chip stocks and bonds. Expect a long-term, finger-tapping wait, but by the time that bounty train finally parks in the station, you won’t mind that years have passed. Simply put, the rule of 72 is a shortcut formula for calculating how long it will take for an investment to double, following the return of stocks and bonds, of course.
Once again, you’re now riding in the slow lane. To torque your investments with a turbocharger, read further down.
3. Read the Market
The ebb and flow of the markets doesn’t run on mysterious formulas. Rather, it can be anticipated in the news as stock exchanges and currencies respond to world politics and global announcements.
Simple. If you want to take the pulse of your investments, read the headlines. Yahoo Finance, Google Finance, Wall Street Journal, Reuters, Bloomberg, CNBC are some of the main channels that offer in-depth and breaking news on the trends of the market. You will partake of third party analysis, investors stories, and general business terms as well.
For instance, the most recent headline on Yahoo Finance reads: ‘Trump’s hostility toward free trade might have killed the iPhone’. The Republican presidential candidate has before trumpeted his beef with Apple for exporting their manufacturing power outside the US. In consequence, if Donald Trump makes it to the Oval Office, how would that translate to Apple shares?
Predicting the ever-shifting trends of the market will broaden not only your knowledge base, but build the confidence you need to invest your money wisely, unhurriedly, and successfully.
4. Purchase Shares
Still, on the topic of investing money in stocks, we’ll walk you through the first steps of buying shares. Once you have set up your own online broker account, you are free to make your first trade.
‘Where to invest money?’ is a nagging affair. While information has never been more accessible, it has also permitted a number of quacks and racketeers to storm the Internet. Here is some advice to clear the table.
For one, start with a small number of shares. Forbes advises on an ‘even lot’ of 100 shares. You can read the reason for that here and we vow for the source. After all, they are responsible for naming the most powerful and influential businessmen every year. And almost every individual on the Forbes 400 elite list owns profit-proof blocks of shares.
Secondly, choose your partners wisely. And by partners, we refer to online stock brokers who are reputed for strong trading tools such as fast access to basic charting, low fees, and a clean interface that won’t confuse your dealings.
5. Option Trading
Inserting this complicated method into the recipe only means we’ve already grown confident in your much-improved investing capabilities. That is because option trade comes with a warning tag: only invest with risk capital.
Options are highly speculative and arbitrary in nature. They have an expiration date (usually a few months) and are priced at low values. The main difference from stock investment lies in their high leverage. By trading in options, you can make a lot of money if the value of the asset goes up. However, if it doesn’t, you lose everything.
Simply put, you’re speculating on a company’s stocks with every option equaling 100 shares. You can lose or win, but whichever it is, be certain it will be big time. As mentioned above, options are the tool of the sophisticated investor.
While there certainly are other methods to introduce you to the big league of the $$$-making world, the best way to invest money is one. Be humble with your seed investments even if they only sprout a barely visible patch of green at the beginning. Practice now for a future when you will comfortably rest in the shade of your smart decisions.