Instead of working for your money you should make your money work for you. But where would you get the best interest rate for the money? This is how you do it.
Deciding about investing your hard-earned money is not always easy and needs to be designed for your needs. Before deciding where to invest money you should think about the amount of money you want to invest, what you are hoping to get out of it and how much risk you want to take.
Foreign Exchange Trader: Are you following the international financial markets with a lot of passion? Good news: This could be your future income. Investing in the Forex market means that your profit comes from the movements in exchange rates. Exchange rate movements are caused by a number of factors, including a general election or positive news about one country’s economy. As an example: if you started with hundreds of Euro and invested them into Great British Pounds before it reached a 9-month peak after the vote to delay Brexit, you would have gotten a big payout once you exchanged it back into Euro. Of course, currencies do not always react as forex traders expect them to and so there is a risk of losing money – especially in the beginning for those who have little diversification in their investments.
Investing your money in the stock market: You get charged the lowest costs by buying stocks online but only little advice. A few years ago, the variety of tools and research was only available via full-service brokerage accounts. Nowadays online stock trading sites offer access for investors and give them insights on market trends and movements. Changes in stock price largely come down to news and developments on the firm who you have invested in, so having a keen understanding of the industry and its challenges is beneficial. Many stocks also offer dividends, this is where the company decides to reward its shareholders with a financial payment, increasing the returns on your investment. Keeping an eye on the stock market is important. You may want to sell your stock when the price rises or keep hold of it in the hope it will continue rising. In the same way, when the stock market falls in value you may be tempted to sell, but it could be worthwhile waiting out the downturn and allowing the price to rebound.
Another possibility to earn money is by investing in UK government bonds: Government bonds are typically the safest of investments, particularly for banks or investment funds, as Governments always pay their debts. Because of their attractiveness as a ‘safe’ investment within a particular portfolio, the returns on offer are generally lower. The value of Government bonds also move due to changes in demand and supply, but Government will only pay back the face value upon maturity. That is, when the bond expires, the Government will repay the amount that it borrowed in the first place, as interest has already been paid over the term length of the bond. However, most investors need not worry about holding a bond until maturity and instead try to profit from changes in the price.
A general rule is: The stock market will give you the highest return but have the most risk, government bonds will give you a lower return but with little risk when you invest money, and unpredictable foreign exchange movements are somewhere in the middle.