There are lots of ways and tools to achieve financial freedom. We all want to have stable passive income that can support us in years to come. We can only achieve it thru investments, making our money work for us. Money is not a good master, but it can be a great slave. It can work for us 24/7 without complaining. The more money working for us, the more money it can generate and keeps the cycle going. The goal is to have more money coming in thru passive income, more than money coming out thru expenses. Once you reach this point, you can sit back and relax not worrying about uncertain future.
There are lots of investment vehicles we can use on achieving our financial goals. There is no one size fits all approach. The best way is to try them and see for yourself. If it works for you, that’s great. If not, go try other investment vehicle available.
TYPES OF INVESTMENTS PRODUCTS
STOCKS. Instead of putting up a business and compete with the existing market, why not lend your money to this big business and share their profit? That’s basically the concept of stock. Instead of managing your own money, you can leverage on the experience of big businesses to grow your money. These public listed companies need your money in order for them to expand. There are thousands of them you can purchase only, depending on your country and access to global market. I will not dwell much on the topic, for sure you can find ample sources online about it. There are 2 ways to earn in stocks: dividend and price appreciation. Buy low and sell high to make a profit. Hold it longer and you might get a profit sharing yearly if the company performs well. You are a share holder and entitled to dividends. Return of stocks are not guaranteed, there are risks involve.
BONDS. Unlike stocks which are risky and not guaranteed returns, bonds on the other hand is the exact opposite. Companies and governments issues bonds so that public can buy. It’s like they are selling part of the company as bonds with a promise of small guaranteed returns in future. Government usually issues bonds or treasury bills whenever they want to raise money for projects. Same with other companies. This is a great investment if you have more money and your priority is capital preservation with minimal return.
INSURANCE. Some people might argue if this is a type of investment. But come to think of it. When you buy an insurance, you only pay less amount compare to how much you are insured. For example, a term plan in Singapore for a 30 year old female with $1M coverage is around $300 per year. Client invest the premium for uncertain future. Worst scenario and if something happen to the client, the beneficiaries can get the $1m payout money. That’s a good return of investment actually. Given the fact that we will all die and get sick in the future. Investing in insurance is a good way to protect our finances and at the same time, it create an instant asset to our loved ones.
INVESTMENT FUNDS. These can be a mutual funds or UITF. You can buy these products thru broker, banks or insurance companies. In stocks and bonds, you are the one who manages the buying and selling part. However, for some people who don’t have the knowledge, time and experience, they let experienced people to do it for themselves thru funds. When you buy this funds, there is a designated fund manager who manages the fund. The role of the fund manager is to collect all money from investors and pool them to invest on various assets specific for the fund. All we have to do is open account and invest our money. We just have to sit back and relax and wait for the daily progress of the funds. Or you can invest and forget if your investment horizon is long term. There are hundreds of funds to choose from, investing in various assets available. It can be stocks, commodities, bonds, crypto, etc. Risk is minimal compare to stocks as the funds are usually diversified.
BUSINESS. If you have the knowledge, guts and experience to run your own business, it’s a good way to generate money. You are the boss and you let people work for you. You control your money. However, not all are destined to be a successful business owners. Most will fail compare to those who will succeed. Unless you try, you can never tell which side you can be. Doing business at start can be tiresome and requires a lot of your time, money and effort. Great sacrifice is needed in growing your business. If this is your cup of tea, go ahead and try your luck.
CRYPTO. The hottest investment right now is the crypto currencies. Though there are hundreds to choose from, all wants to duplicate the success of the first crypto, BITCOIN. It’s a digital money can be used in buying and selling. Given the staggering growth of crypto over the years, no wonder a lot of people wants to take part and hoping to get rich quick. Investing in crypto is very risky. There is no underlying product or asset to hold on to. Most of the growth are base on hype and hope that the coin will be valuable in future. Invest extra money only, money you can afford to lose.
GOLD & SILVER. For the past centuries, gold and silver are used as a form of currencies. This is how they measure the wealth of an individual or country. They are valuable commodities that can be exchanged with money, services or goods. Their price keeps on increasing and never goes down as they have physical asset that you are buying. They are recognised and can be traded globally. Before, all printed currencies are backed by real gold stored somewhere. But now with the fiat currency, most rich people keep their money in gold rather than a printed paper money.
These are just 7 examples of investment types. There are lot more out there. You just have to search, learn and invest on them. Keep reaching for your goal of financial freedom!