Whether you have had an unexpected windfall, received a raise or decided to just do something different with your money in 2019, choosing the right investment option is crucial to ensuring those funds are working for you. The problem may be that you have no idea where to start. Below are five of the best investment options for the new or seasoned investor.
1. Real Estate
If liquidity isn’t your primary concern, then real estate investment could be ideal for you. Of the two options residential and commercial real estate, the latter offers greater income opportunities, but typically requires a more substantial initial investment. If your money situation does not allow you to purchase commercial real estate outright, you can also invest in a REIT. Real Estate Investment Trusts pool money together from individuals to invest in either managing/owning commercial properties or the mortgages on the properties. Any direction you select with this investment will diversify your portfolio.
2. Pay Off High Interest Debt
Experts in the financial arena agree, the sooner you pay off your high-interest debt, the more potential you have to make money in the future. Don’t continue to hand over your valuable investment dollars to high-interest rates. Instead, create a payment plan to eliminate those debts as soon as possible. Your money should be earning you interest, not someone else.
3. Peer-to-Peer Lending
Perhaps you would prefer to invest in the financial wellbeing of individuals. If so, peer-to-peer lending may be your next economic opportunity. Your role in this fiscal scenario is similar to that of a bank—you lend money to people and receive repayment with interest. Unlike a bank, you can opt to pool your money with other lenders and spread your investment across multiple individuals to minimize your risk. Various platform options exist, as do levels of risk, so you can find the version of the venture with the company that best suits your comfort level.
4. Exchange Traded Funds (ETF)
Investing in the stock market becomes very simple with an ETF. An ETF is a basket of investments– a straightforward way to immediately reduce your risk exposure by spreading your investment dollars over a mixture of stocks and bonds. Also, most ETF’s have incredibly low management fees due to their low requirement of human intervention. They differ from mutual funds in their higher level of liquidity and their lack of capital gains taxes before redemption of the fund.
5. Roth IRA
If you are new to the investing world and can set aside some money each month, a Roth IRA is a great tool. A note of caution, cash in a Roth IRA is meant for retirement, not immediate liquidity for an unexpected expense. The tax benefits of this tool are excellent—neither the initial dollars are taxed, nor are the final funds when you retire. To be successful with this fund, you must be willing to contribute consistently. Your money grows in value as interest compounds over time, so the higher the funds in the Roth IRA, the greater the interest dollars earned.
2019 is your year to make your money work for you through intelligent investments. You can invest in yourself by paying off your high-interest debt or contributing to your retirement through a Roth IRA. You can invest in other people through peer-to-peer lending. Or you can choose to diversify your investments by pooling your funds with other investors in commercial real estate ventures and/or ETFs.