Beginners Finance
Welcome to our website. We will be exploring diverse investment methods for beginners.
Bonds
Bonds are an investment type backed up by a government or company. When the person purchases a bond, it is returned back by a certain percentage of interest. Bonds are given for 1 to 30 years of time. Usually it is the safest and lowest earning investment type. Despite the yearly 4-5 percent income, it is supported by a larger institute, which makes it a good way to invest.
Stocks
Stocks are a mid risk investment in comparison to bonds. Stocks are a way of owning a certain percentage of a company. Investor could spend anywhere between few dollars to billions. Stocks also separate in itself. Investors can pick to buy stocks of bigger companies for a 10-15 percent return yearly, or buy stocks of lower capital companies to expect more return on investment.
Index Funds
Index funds are investing in stocks but safer. Index funds consists of multiple stocks made up like a basket. It can have around 10 to 500 stocks in it. Therefore, Index funds doesn’t get impacted from company conflicts. It gives the investor an average return of all stocks. S&P 500 is an example to index funds. It gives an average of 10% yearly.
Precious Metals
Precious metals consist of gold, silver, platinum, and more. Usually, they are used in jewelry or watch industry, so the demand always exists. In comparison to index funds, precious metals like gold gives a similar return of 9% per year on average. Precious metals are a good way to invest because it doesn’t have a risk of going to zero.
Crypto
Crypto Started trending in the last 15 years in comparison to other investing methods. Crypto is divided into two parts; Cryptocurrencies which are made up by their own blockchain, and crypto tokens which use other existing blockchains. Cryptocurrencies tend to be safer than crypto tokens. First crypto coin was Bitcoin. It is an asset which can be obtained by buying it, or mining it which can’t be done in stocks. However, crypto coins are a high risk investment strategy. It can go up or down more than 20 percent in a night. Some can even go to 0. While investors can lose all of their money, they can make huge gains like 10x or 100x of their investment.
Risk
Most of the time, risk to rewards ratio is directly proportioned, meaning more risk can give the investor more return on their investment. Nevertheless, It doesn’t mean that investors should invest on riskier ones. As the risk increases, there is more chance that the investor could lose more, if not all of their money.
Low Risk
Bonds, index funds and precious metals.
It is clear to see that while bonds, index funds and precious metals carry lower risk, bonds give a guaranteed return.
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Mid Risk
Stocks are a great way to invest. While stocks are listed under mid risk, it could have a lower risk, if the investment is made smart.
High Rish
Cryptocurrencies have a high risk to reward ratio. Some investors could make huge profits, while others can lose it all. Investors shouldn’t invest more than they will afford to lose.