1: the stock market
Although “investing in the stock market” is some of the most basic advice you’ve ever read, listen to me. While everyone knows that the process of investing in the stock market has been a historic success, too many people don’t trust financial markets and choose to stay on the sidelines.
Then there are those who think that the stock market is so overvalued that they jump in wildly. But it’s true: no one tells you to put all the extra money into stocks. Instead, I suggest that you invest a small amount of money over time in a method called the dollar-cost averaging method.
The dollar-cost averaging requires that we invest our money in investments at any time. This could be 12 months. This will be 18 months. Well, maybe five years.
Colorado Jenkins’ financial adviser David Henderson, further explains the calculation method of average cost: $” when the market is high, you buy fewer shares, when buy more stock market is low, “he said. This means that over time, you will use this method to get a lower average share price. Obviously, it’s easy to see why this would be good.
Now that we’ve talked about the importance of investing in the stock market, let’s talk about where to invest your money. What are the best tools and vehicles we can use?
This is another option that is overwhelming. However, I usually advise people to wet their feet with mutual funds or etfs.
If you have a financial adviser who represents your work, they may be able to clean up the mutual funds that underperform active management. Otherwise, you can invest in index funds, which are not actively managed but have a rich history of return.
If you already have a brokerage account, you may want to stick with it. Otherwise, you need to find a new place to help you invest your money. One company I’ve been suggesting is Betterment. With Betterment, your money can be invested in etfs, and they will not charge you for managing these funds. In addition, they choose the ETF you invest in based on your preference for risk, investment objectives and other factors.
What does that mean? This means that you can invest your hard-earned money, then sit down and enjoy the rewards and make them work hard.
If you want to have more control over your investments, online brokerage firms like Ally Financial, TD Ameritrade and e-trade can easily manage with low fees and easy-to-use platforms. There are plenty of other “robo-advisers” to choose from.
Finally, there is a simpler way to invest in the stock market with less effort — thereby increasing your contribution to the retirement account supported by your work. Arizona financial planner Charles c. Scott says this may be your best bet – especially if you don’t have enough input to compete with your employer.
“Every dollar you contribute can match the dollar,” Scott said. “This is your 100% return on investment.”
If you don’t make the most of your 401 (k) or enough contribution to get a game, you might as well start there.
2: peer-to-peer lending.
Peer-to-peer Lending platforms such as Lending Club and Prosper are in second place this year with extra cash. With these companies, you can lend to individuals small increments as if you were a bank. The best part is that you can get decent returns – usually more than 6 percent or more.
As an investor in peer-to-peer lending, you are investing in other people and their goals. It’s comforting to know that you won’t lend to someone who doesn’t know a lot of money. On the contrary, the amount of money you invest in is divided into $25 increments in hundreds or even thousands of loans.
While it may seem strange to hear a financial adviser advising people to invest in peer-to-peer lending, I’m not the only one who recognizes the value of these platforms. Clint Haynes, a financial adviser in Kansas city, told me that for several reasons, he supported peer-to-peer lending as an alternative to the stock market. First, these companies can easily register and start using. Second, for safer loans, your rate of return may be between 5 and 7 percent, and for riskier loans, the rate of return is higher. Last but not least, you can usually open a new account for as little as $1,000.