Whenever you think about investments, chances are you just picture a bunch of flashy numbers on screens and several terms difficult to understand. Yeah, it may seem intimidating, but the world of investments can actually be a lot funnier than you imagine. If you have some extra cash and are looking to put it to work for you, here we’ll show you some options that will help you decide what to invest in.
Before we move any further, you need to understand that there is no such thing as a totally safe investment. There’s no way to put your money on the line and be 100% confident that you will get the return you expected. This is because every kind of investment involves a certain amount of risk.
We get it, this may sound a little discouraging, but don’t lose hope. Despite the risk every investment represents, there are some options out there that will help you gain confidence as a rookie investor and minimize the risk of losing your money. Keep reading to discover some alternatives that will help you figure out what to invest in.
What is the stock exchange?
If you are reading this article, you’ve probably heard something about stock investments. Understanding what stocks are and how the stock market works are basics to learning about other investment vehicles.
Stocks are titles that represent ownership of a company. Think about it as if they were slices of a pie. The whole apple pie is a company, and as a shareholder, you are the owner of one slice of the pie. This gives you the right to receive some benefits such as dividend payments and participation in the company’s decision-making process.
Now the stock exchange is a market focused on trading financial instruments, such as stocks. It is basically a traditional market where you find lots of products and offers, but instead of filling your shopping cart with fruits and vegetables, you purchase stocks from the world’s largest companies.
Don’t feel bad if all this sounds like uncharted territory for you. It is completely normal to feel a little overwhelmed at the beginning. Make sure to read the rest of our articles to understand a little more about basic investment lingo and how the stock market works.
What to invest in?
Now that we’re on the same page about stock investments, let’s move on to answer the initial question: What to invest your money in? What are the safest options out there?
First on our list are ETFs; this stands for Exchange-Traded Funds. ETFs are one of the financial products with greater growth during the last couple of years. We’ll see why.
Think of ETFs as shopping carts including different types of products. Inside your shopping cart, you’ll put some fruits, veggies, cereal, meat, candy, and more. ETFs are similar in the sense of being basket-like products including stocks from different companies.
If you’re wondering what to invest your money in, ETFs are a great choice due to their diversification. This means that by investing in just one ETF, you could be investing in different companies at the same time. The risk of your investment is lowered because the performance of each stock inside your ETF is independent of each other. Some of the stocks may keep growing even if some others have been losing their value.
For instance, let’s say you invest in an ETF that includes shares of a tech company, a restaurant, and a healthcare company, among others. At the end of the year, the tech company shows poor performance, while the healthcare company shows some good results. If you have invested all your money only in stocks from the tech company, your investment would have lost its value. However, by investing in an ETF that includes all three companies and more, the losses caused by the tech company are compensated by the gains from the healthcare company, which keeps you from losing the money you invested.
Now let’s talk about fractional shares. As their name suggests, these are shares of a company that are divided into tiny little fractions. They are portions of a stock that let you have the same proportional benefits as a whole stock.
Investing in fractional shares lets you become a shareholder of a company for just a tiny percentage of the price of a whole stock. If you’re wondering what to invest your money in, fractional shares are another great option because they let you get a taste of the stock market with just a little portion of your available cash before you go all in.
For instance, if you are just starting and are not quite sure about how a specific stock is going to perform in the next couple of weeks, you wouldn’t want to risk hundreds of dollars to invest in it, would you? This is the perfect scenario to invest in a fractional share. In this way, instead of paying, say $235 for a whole stock, you can start investing with as little as $5 and keep investing the value of your investment over time.
In case the share you bought doesn’t perform as you expected, you are good to move on having lost just $5 instead of hundreds. This is why fractional shares are a perfect alternative to invest in if you are looking to minimize risk.
Always keep in mind that the more money you put into a fractional share, the more benefits (or losses) you’ll get; just as investing in a whole share.
How to start investing?
We have discussed two investment vehicles that are perfect if you’re not sure about risking your money. Now you may be wondering how you can get started. One of the best options to dive into the investment world is through the FlexInvest platform. There you’ll find ETFs from different industries and fractional shares from the largest companies in the world.
Before you go check all the benefits FlexInvest has to offer, make sure to take a look at the rest of our articles to get a grasp on how to start investing. You’ll surely find something to set you up on your way to success.