When you’re getting started and looking for the best investments, one of the keys to success is to take your time, do your homework and choose a range of different investments. This doesn’t only maximize your chances of reward, but also minimizes the risks while you learn the ins and outs of the ones you’ve chosen. There is simply no benefit in making large short-term gains, if, due to inexperience or unrealistic expectations, you lose it all, and more.
Below we’ve selected some of the safest ways to generate the income you want, including some possibilities that you may not have considered.
1. Certificates of Deposit
Certificates of Deposit are a safe savings option which can provide a higher rate of return than higher interest rates than typical savings accounts. To get the most benefit from this type of investment, and avoid penalties, you’ll have to be certain that you won’t need to access the funds until the end of the agreed term, which can be as little as 3 months. They are perfect if, for example, you are planning to buy a property in a few years, and want to plan ahead. Your money is safe somewhere where you can’t access it, and it’s growing steadily.
2. Individual Dividend Stocks
Buying stocks in well-established so-called’ blue-chip’ companies is a less risky way to get involved in the stock market, than investing in start-ups or disrupters. Subject to external market forces, these are some of the best investments for income generation. They perform well over time and tend to pay regular dividends to their shareholders.
3. Pick Mutual Funds
Although traditionally you would need a sizeable amount of cash to invest in a mutual fund, these days there are many which require a deposit of $100 or even less to get started. The advantage of these funds is that instead of placing all your cash into one stock, you are taking a share in a portfolio which can be spread over hundreds of different stocks, which reduces the risk. They’re considered a great choice for anyone just getting started, and are recommended for long-term investments.
4. Music /Wine/Art
So far we’ve highlighted some fairly traditional ways to get started as a new investor. Now let’s look at something a bit different. If it’s linked to your interests, and an area you know something about, it can also be a little more fun, while bringing in a valuable return.
For example, if you love music, think about investing some of your available funds in music royalties. Using one of a number of platforms, such as ANoteMusic, bid for works from a catalogue, then watch your choice as it generates cash or gets traded. While it’s not a good idea to sink everything you have into this type of alternative investment (and you could also go for wine, or art, if they’re more your area of interest), the advantage is that they are hardly affected by major changes on the financial markets.
If you’re just getting started, the possibilities for investments are almost endless. The keys are to be sure that you understand the basics of any vehicle you choose; to diversity your portfolio; and to look for long-term returns on your investment.
Updated January 2, 2021
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