What Are Good Investments Other Than Stocks
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| Ways To Invest Money Other Than Stocks |
There are other places to invest your money besides the stock market, including:
- put cash in the bank
- Pros - low risk
- Cons - Low returns (usually less than inflation).
- Keeping your money in the bank seems to be a safer option.
However, cash in itself is not a great investment – especially given the incredibly low rates of interest paid by banks and construction societies. Interest rates rarely exceed inflation, which means your money is actually losing value.
If you don't want to take any risks with your money, putting your money in a savings account (or Tax-Free Cash ISA) is a good option.
Financial journalist Rodney Hobson says:
Whatever you do, don't just put your cash under the mattress. Thanks to inflation, it's losing you most of the money out there - and you can lose a lot if you steal!
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- Buy and sell antiques, art, wines, collectibles
- Pros - Fun way to invest if you're interested in the things you're buying
- Cons - You need to be an expert on what you're selling, plus items aren't guaranteed to go in value.
- You can buy and sell many things for money.
You may already have some childhood toys that cost a lot. Just keep in mind that buying these types of items doesn't generate immediate income and the benefits depend entirely on what a person is willing to pay for them.
You also need to be an expert in what you are collecting. Otherwise, someone who knows what they are doing can use this to their advantage.
A good starter strategy is to obtain desired items where there are few buyers (such as gumtree or car boot sales) and where demand is highest (such as eBay). Check out our guide to selling on eBay for more tips.
2. invest in property
- Pros - Long term, stable investment
- Cons - Requires very high upfront costs and is not so easy to sell if you need money for something else.
- The single best investment for most people, and one you should consider as soon as your income allows, is buying your own home.
Rodney Hobson told us:
Historically the value of housing rises faster than inflation, and one day you will clear the mortgage. Rents increase from year to year and you will always need somewhere to live.
Once you are on the property ladder, you can climb up to more expensive properties as your income improves. As an investor, you can go a step further with buy-and-hold, owning assets that increase in value along with income.
The major disadvantage of investing money in property is that you need a large amount of money for each investment, and keeping an eye on the property and tenants can be time-consuming. Make sure you set aside some money to cover huge maintenance bills (which crop up whether or not you can afford them!).
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3. buy bonds
- Pros - Less risky than stocks
- Cons - Diminishing returns.
- Simply put, a bond is a loan taken out by a government or company. Those issued by the UK government are known as gilts because certificates had gold leaf around the edges to reassure investors how secure they are. By buying bonds or gilts you technically lend them money.
So what's in it for you? Bonds and gilts have a guaranteed interest rate and (usually) a date on which they will be redeemed, with the borrower buying them back at full price, known as the nominal or par value.
The return on the bond (the amount of interest you earn each year for every £100 invested) will reflect how safe or risky the investment is considered by investors. The more secure the loan (the less likely the borrower is to repay his loan), the lower the yield.
When interest rates are low, the price of the bond goes up, reducing the annual amount you get to pay for your investments. But when interest rates are high, the market value of the bond goes down.
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Rodney Hobson told us:
Bonds issued by governments are known as sovereign debt and are generally considered to be safer than company debt because governments are less likely to go bad than companies. Keep in mind, however, that Argentina defaulted on its loans in 2005, and Greece has recently struggled to honor its obligations.
Unlike fixed-term savings accounts, it is possible to sell your bonds at any time. But if you do so before the due date, you could end up receiving a lesser amount than you originally paid for them.
4. Invest money in cryptocurrency
- Pros - Able to trade 24/7 and get high returns possible
- Cons - High risk, very volatile, has not proven itself to be a solid long term investment.
- Cryptocurrencies like bitcoin are becoming increasingly popular among young investors.
Especially on social media, it can seem like cryptocurrency is a get-rich-quick scheme. and when
It is important to know the risks before investing any money in bitcoin or other crypto.
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