Find out the best ways to invest money may be a real challenge in a constantly changing environment, especially as investors are looking for investment, which brings them high returns as soon as possible without any risk.
Realistically, there are no investment vehicles that offer high returns with low risks, and there is an inverse correlation between investment risks and return on investment, the higher the returns, the higher the risks.
So, while choosing an investment method, your risk profile must match the risks associated with the product that you want to invest in. There are investments that involve high risks but achieve high returns that are adjusted for inflation.
In general, investing money well does not require you to be a genius, according to American billionaire Warren Buffett: “You do not need to be a rocket scientist to know how to invest your money successfully. Investing is not a game in which someone who passes the IQ test is excelled.”
When determining the best ways to invest money, it is better to consider the importance of investment diversification, define goals and needs and allocate an emergency account in order to avoid debts, and adopt a tight investment plan in which budget lines are clear, as well as pay attention to the time factor allocated to the investment process.
How do you invest your money?
Money is invested by buying part of a company or commodity with the belief that the value of that company or commodity will grow over time, but do not forget, investment is not a quick scheme for wealth, but rather a means of developing wealth, and does not require you to have a large amount of money in the beginning.
In this article, we provide a guide to help you gain a good understanding of investment, and to know the top 10 investments to make money.
Valuable advice from experts for personal financial planning.
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What are the best investments to make money?
1 – Direct investment.
The idea of direct investment is based on either investing the money automatically or sharing with another person, or speculation by offering money and relying on another party in terms of work and experience.
Investing in stocks directly may be volatile and difficult to determine the timing of entry and exit, but over the years, stocks managed to achieve a higher return on investment compared to other assets.
At the same time, the investment risk may be high unless the trader chooses a stop-loss order. Currently, returns from 1 to 3 and 5 years are around 13%, 8%, and 12.5%, respectively.
2 – Securities.
Securities are the most common and most beneficial place for an investor, as buying shares in a company means that you own a part of it, and therefore, as the value of the company grows, the price of the shares you own increases, and with the company achieving profits you will get a portion of these profits based on the profitability of the shares that you have To buy it.
This type of investment remains risky and requires careful study, but in general long-term investment is more feasible than speculation that depends on market fluctuations.
3- Indicator boxes.
Index funds are a type of investment fund that tracks a specific sector, and therefore the amount of investment risk is linked to the level of performance of the sector itself, and you can derive returns by distributing profits to investors, or by selling your stake in the fund.
For example, during the past ninety years, the S&P 500 index has achieved an annual return of 9.8%.
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It monitors the underlying index and works against its performance, and it is traded on the stock exchange like stocks, and its value is volatile.
At present, the return on investment in investment funds traded on the exchange from 1 to 3 and 5 years is about 15%, 15%, and 20%, respectively.
5 – Gold.
The gold industry has evolved greatly, which led to the multiplicity of its investment methods, especially with the emergence of financial products and tools denominated in the yellow metal, and thus can be invested in gold by buying coins minted in gold or through investment funds traded in gold or by buying sovereign gold bonds.
6 – Real estate.
A return on investment in real estate can be achieved either by increasing the capital when selling or through leasing, and REITs are a good tool for anyone who wants to invest a small amount in the real estate sector.
The location of the property is the most important factor in determining the value of your property, as well as the amount of income from the rent. In addition, investment in real estate is less liquid compared to other investments.
Safety is the most important feature that most investors are looking for, and safe investment methods are:
7 – Banking savings.
Savings accounts play a role in the investment because they allow you to store a risk-free cash amount that you can use to purchase other investments or use in an emergency.
These accounts are opened in person, over the Internet or mobile phone, and the required deposit amount is usually small for novice investors.
8 – investment certificates.
It is defined in terms of time and value, as money can only be withdrawn after a specific date, and it is linked to a specific value that can be doubled if the value of your investments is large.
The value of return on investment in investment certificates is high compared to other investment accounts, as central banks around the world rank them in the list of safe and secure investments.
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9 – Fixed Premium Certificates.
Often this type of certificate is offered by insurance companies, and they are issued according to a specific investment size and a certain time period for cashback.
The certificates of fixed installments are considered contracts with insurance companies that cannot be traded in the financial markets, and the stability of the return and safety, and the recovery of the value of contracts after the end of the agreed period, are among the most important benefits of those contracts.
10- Government treasury bills.
Government treasury certificates are among the safest investments, and US treasury bills issued by the United States of America are the most popular and popular. Treasury bills are safe and flexible in terms of the value that can be multiplied continuously and are classified as tradable in the financial markets, that is, you as an investor can sell them and obtain cash after the specified time period has passed.
The return you earn as an investor from government treasury certificates is lower than for other types of investment.
Finally, during the search for the best ways to invest money, we find that the above-mentioned investments have fixed income, while others are linked to the market path, and both play a role in the process of wealth creation.
Market-related investments help you to overcome volatility and generate a really high return, while fixed-income investments ensure you maintain the accumulated wealth in order to achieve the desired goal.
To achieve long-term goals, it is important to make better use of both types, and as an investor, you have to adopt a wise mix of investments taking into account investment risks, taxes and time horizons.
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The most prominent mistakes that lead you to a loss in the stock market:
Many investors believe that investing in financial markets is the only way to achieve financial success. While you find promises from some financial unions for those who buy a basket of mutual funds, to obtain a fixed return at a specified rate annually and other false promises to encourage him to invest.
But in fact, whatever people think about their firmness in terms of buying and selling stocks and making deals in the stock market, they usually fall into the same emotional pattern as buying high stocks and selling low stocks, they are humans in the end. It is their nature to search for victory and a sense of victory when their stocks rise in value and at the same time they seek to avoid pain when losing and the value of their shares drops (such as not wanting to admit or bear the loss). They make double mistakes that lead them to more loss in the stock market, here are some common mistakes that new investors make:
1- Refusing to set a stop-loss rate.
The stock is bought when its price is expected to rise in the market, but what makes you sure that the stock will rise? Perhaps the opposite happens because you made a mistake during the analysis, bought this stock at the wrong time, or the appearance of price shocks as a result of surprising economic news, or otherwise.
Nothing will reduce your performance and your resolve, such as actual loss, and it is almost identical to the estimated loss calculation. Setting a stop loss ratio according to the rules of risk management and capital management is much better than losing on the ground.
2- Not realizing the actual loss.
Your investment portfolio deserves good equity for good performance. It is common to hesitate to sell losing shares because of the inability to admit mistakes and the occurrence of the loss, in the hope of compensating the loss later. Therefore, it is necessary to properly evaluate the losing stocks to maintain good management of your investment portfolio.
3- Take more risks.
It is often said that to get more money you must take more risks. This is true, but it has another aspect, which is that in the event of bad conditions, the losses will be great. Preserving capital is crucial to achieving long-term investment portfolio management, otherwise, the investment portfolio will collapse if most of the capital is lost. Therefore, portfolio managers allocate a ratio of 2 to 5%, not more than the total investment capital in one share.
Money management also depends on your overall investment position, even when your analysis is highly bullish for a stock, so you should not place all of your investment in this stock. This gives you the cash to buy investment opportunities in other stocks and keeps you away from the need to liquidate shares at an inappropriate time to collect cash.
4- It is not necessary that a good company has good shares.
There are some large companies that have medium shares, and some medium companies that have large shares over short periods of time. It is a common mistake to try to mix them.
You must study all the criteria, the status of the stock itself and its history before making an investment decision.
5- Reliance on technical analysis only.
It is also a common mistake for non-technical technical analysts, at certain times, to use only one or two indicators to analyze the stock’s condition.
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This is sound behavior in the event of the stability of the stock market, but the fact is that the conditions of the stock market are constantly changing, so the effectiveness of the indicators. Which works well may change from time to time. You must differentiate between indicators that do not work and are not working and are willing to change when emergency conditions arise.