Navigating the world of investments can be quite the rollercoaster, especially in this time of global economic uncertainties. You’ve probably heard the horror stories of people losing their hard-earned money due to bad investments in real estate or meme stocks and the likes. Some of your friends and family have probably told you that it is better not to invest at all. Well, here’s a little secret: investing has proven to be one of the best ways to build long-term wealth.
So, let’s explore five of the best ways for people in their 20s-40s to start investing.
1. Proprietary Trading
If you’ve ever been interested in trading in any global financial market (like the Forex Market), then this is perfect for you. Proprietary trading, or prop trading, is when a financial institution (like banks, hedge funds, etc.) trades different financial instruments (such as stocks, commodities, and even currencies) using their own capital instead of their clients' money. Trading for themselves allows them to keep all the profits instead of just a very small portion when they trade with their clients' funds.
Now, how does this work in your favor? The thing is, most prop trading companies, like OANDA, have spots for anyone who can trade in financial markets; all you have to do is pass an assessment. This means that if you can trade, you can go on platforms like OANDA Prop Trader right now and start investing with money that’s not yours and you get to keep a portion of the profits you make. This is a really good option for so many reasons – it’s very low risk and you’re not investing any of your money, just your time and skill. Plus, these companies have a lot of market information that will give you an advantage in the market than if you were to invest as a retail trader.
2. Cryptocurrency and Crypto Asset Investments
The crypto market is quickly becoming one of the biggest emerging markets in the world and it can be a massive opportunity for millennial investors to generate significant wealth. Even though the crypto market has grown substantially in just a few years, many people are still not paying attention, which creates a great opportunity for those who are open to the idea. Let’s look at some numbers: if you had bought 20 bitcoins for about $20 in 2011 and kept them, you would be a millionaire right now. No other type of investment can match those figures, and the great thing is that the crypto market is still growing, with more opportunities presenting themselves in the form of other crypto assets. These assets provide a perfect entry into the crypto space since the cost of investing in them is very variable; you can start investing with as little as $5.
As much as the benefits of investing in crypto are undeniable, you also need to take the time to understand the risks of investing in the market. The market is highly volatile because the prices of the assets can fluctuate dramatically very quickly, and the regulations around investing are still very complex and not well defined.
However, crypto is still a really good investment by most metrics for millennials who are ready to understand the market and have the appetite for the risks involved.
3. Retirement Accounts
The goal of investing isn’t to get rich quick. That is the common misconception of failed investors. It’s better to think of investments as a way for your existing money to make more money for you, which is exactly what retirement accounts are for. This is a type of investment that takes advantage of compound interest to grow your money exponentially. If you currently have a full-time job or a gig that pays regularly, and you’re willing to wait for 30+ years, then this is an investment plan you should definitely consider.
It works like this: you open a 401(k) or an IRA, deposit money consistently, and withdraw the funds when you retire. Plus, your employers could match your investments. This kind of investment also provides tax benefits both while you’re investing and when you’re withdrawing your money later on.
These types of investment assets might sound boring because you don't get any real benefit for decades. However, it’s a low-risk investment, and it doesn’t stop you from pursuing other kinds of investments.
4. Stock Market Investments
If you’ve been thinking about investing in the stock market, here’s your sign to do it right now. The stock market is really huge, and it’s an excellent option for anyone considering long-term investments. It has also proven to be one of the most reliable ways to build wealth over time. For example, the S&P 500 has delivered an average annual return of around 10% over the past century, which is far better than traditional savings accounts or other low-yield fixed-income investments. The key to stock market investing is committing to the long term so the power of compounding can work its magic.
Thanks to technological advancements in recent years, the rise of low-cost brokerage apps has made stock market investing appealing. These apps have made investing accessible to everyone by removing the barriers of high fees and the complexity surrounding the stock market. This means you can invest in the stock market right now with just an app and a small amount of money.
5. Bonds and Fixed-Income Investments
It’s true, government bonds are not exciting (at least not as much as crypto), but they are undeniably safe. So, if your priority is a low-risk way to grow your wealth, you have your answer. Historically, government bonds have delivered steady annual returns of around 2–3%. If you’re looking for stability and reliability in your portfolio, this is a must-have. Plus, many investment experts believe that this is the main component of a well-balanced portfolio.
Although bonds are a great starting point, it’s important to explore other forms of investment and diversify your portfolio. Diversification not only spreads risk but also increases the potential for returns across various asset classes. Bonds, however, remain a dependable anchor in your portfolio, ensuring stability while you explore higher-risk, higher-reward opportunities like stocks or crypto. Start here and build a diversified strategy that aligns with your financial goals.
4 Quick Tips for Investing Wisely
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Start small: Investment shouldn’t be something you rush into. It's okay to start small with what you can afford to invest and gradually increase your contributions over time.
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Diversify your investments: Invest in different markets, asset classes, and industries. This will help minimize risk and increase chances of higher returns.
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Stay informed: Know what is going on in the market. You need to know the market trends, economic news, fiscal policy development etc.
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Seek professional advice: Get personalized guidance from financial advisors to prevent you from making really expensive mistakes.
Long Story Short
There are many ways to approach investing; your risk appetite and capital will determine many of your decisions. Whether you choose to invest in crypto, stocks, bonds, or retirement accounts, it is important to minimize your risk, diversify your investment portfolio, and only invest what you can afford to lose. Remember, investing is a marathon, not a sprint, so think long term and let the power of compounding interest work for you. Seek professional advice when needed and watch your wealth grow steadily over time.
