The pandemic, which factually shackled the habitual rhythm of life of the planet's inhabitants, especially made significant adjustments to the economic sector. A number of negative trends caused by the depreciation of national currencies and lockdowns, which have already become customary, increasingly make citizens of different countries doubt about the stability and security of the future for themselves, their families and businesses. To make sure that tomorrow does not disappoint, it is important to take care of your financial situation today. Every day more and more people are coming to these conclusions. One way to secure your future is to invest your money wisely.
Despite the obviousness, keeping money "under the mattress" is a bad idea. This way, the amount of savings will quickly melt away. Even if you don't "take out" a little by little yourself, inflation will do it for you within a few years. A different approach is needed here, some effective method that will help not only to save, but also to multiply capital.
In theory, you can choose dozens or even hundreds of variants. In practice, however, the effectiveness of most of them depends on various factors. For example, what was profitable in the 90s of the XX century, today is unlikely to justify the pinned hopes. However, let's leave memories for another article and focus on the present.
Most people take their first steps into investing with the views of billionaires and great investors in mind. Real market gurus often share the experiences that led them to financial heights. The opinions and advice of millionaires are often decisive for people when making the right decision. So we will do the same. Let's try to figure out how experts and successful investors, theorists and practitioners of global finance, as well as opinion leaders recommend disposing of capital taking into account the realities of this year, 2021.
Let's take together another step to improve financial knowledge, drawing on the experience of professionals. For someone, the pro guide to profitable investing will be a repetition or like a reminder of the commonplace truths. It is possible that our article will help someone to discover many new ideas and he or she will create the foundation of their future well-being.
Consider the most successful ideas that are predicted to be successful in 2021. Read, think, weigh and analyze, because choosing some investment options will only require funding, and others, in addition to the money invested, can claim the most precious and generous contribution - the time of their investor.
The peculiarities of money deposits or what is important to know about successful investments
"How many millionaires do you know who got rich by investing in bank deposits? That's about it." used to say Robert Allen, a Harvard graduate, an American famous economist and professor of economic history at New York University in Abu Dhabi.
Every investor's plans include the success of the project in which he invests his money. Of course, any financial investment involves risks. However, hardly anyone invests to lose their capital. In order to multiply money investments, it is important to know certain nuances.
Some "golden" rules of the successful investor
- Capital Allocation.
You should not invest "on your last money". It is a huge mistake to risk all of your savings. Arrange your "golden eggs" in different baskets.
A competent investor does the following: he saves the amount for priority needs (food, clothes/shoes, housing, medicine). To ensure that force majeure does not knock you out of your rut, it is a good idea to have some money in a deposit account or in a safe deposit box.
When primary financial precautions are taken, you can begin planning for high-risk investments. Only available budget surpluses should be used for investments. That is, it should be money whose loss would not be a disaster.
- Improving Financial Literacy
Investing money should be done thoughtfully. Before entrusting a sum of money, it is advisable to get specialized knowledge (read literature on the subject, go to courses, attend lectures, etc.). This applies to any kind of investment, be it a startup investment, a bank deposit or trading. For example, for stock trading participants there is an opportunity to be trained on on-line simulators without betting and risking your own capital. The financial market is ruthless to mistakes. Participants should not rely entirely on luck or fortune. Knowledge, planning, and accurate mathematics are important.
- Finance does not tolerate emotions.
Often impulsiveness is the enemy of good decisions. There is no place for excessive emotionality when dealing with finances. You can't collect yourself, think calmly - you risk making a mistake, investing in a knowingly losing project, and, as a result, instead of making a profit, lose your money.
Try to set yourself a limit on the amount you can afford to invest. Often it is better to stay with your money than to exceed the limits set by yourself and stay with nothing. Participants in trading on exchanges can do this with a "stop loss" function. To do this, you must understand when the time comes to change your strategy and make a different, more effective decision about the fate of your capital.
- Diversify, divide financial risks.
Have a certain amount of money? Divide it into several parts. Invest it in several banks, convert it into different currencies, determine a number of projects for investment, invest it in different types of assets. The main thing is to spread the money between different options. This is important to do in case one idea does not work, you will have a portion of the amount left over, which can be put to work for the sake of capital growth.
- Trust, but always verify.
A successful investor will not take "word for word." All financial matters require thorough verification. This applies to everyone - old friends, relatives, banks, companies. When it comes to money, and especially large amounts of potential investments, trust should be translated into the language of numbers, official papers, contracts, audits, calculations and business plans.
The financial sector depends on many factors and is volatile, so overly bright promises are often a sign of deliberate deception. In case the idea fails, everything else - words, smiles, years of friendship can't be put in your bank account.
And one more thing: if they promise you a huge profit, tell you about the absolute absence of risks and talk about a quick timeline to achieve the desired - this is a reason to recheck everything even more thoroughly than you planned at the start.
Pros and cons of being an investor
Investing is often like a game of casino roulette. For an investor, any idea can turn into a significant increase in capital and dramatically change his life for the better, or it can lead to financial losses in an instant.
Benefits of being an investor
- Ample opportunities. Having some capital, it is actually possible to make money in a variety of ways. The main thing is to study the direction for future financing and set clear goals.
- Freedom. The role of investor opens access to receiving passive income. A lot of ideas in which one can profitably invest money do not require personal participation of the investor himself. The investor reports to no one, does not depend on the work schedule or the mood of management. As an investor, you can rest or engage in other projects, while a successful investment multiplies the capitals.
- An inexhaustible flow of money. Competent distribution of investments allows you to minimize financial risks and to provide yourself with several sources of income.
- Excitement. It doesn't matter which investment it is - the first or the tenth is. There is an opportunity to invest - do it, but do it "wisely". The process itself is captivating, makes you look at the world in a new way. Each new investment of funds - it is a shot of adrenaline, excitement and anticipation of profit.
Disadvantages of an investor role
- Every investor should understand that no matter how perfect the plan is, there is always the risk of losing the invested funds. It is impossible to get rid of the risk of losing capital completely, but you can insure your money by choosing assets for investment, which are considered to be stable. As a rule, these are real estate, land.
- Start-up capital is necessary. For the invested capital to bring profit, its starting amount should be substantial. The higher the investment, the more interest can be received from it. This applies to any type of investment - deposits, stock options, equity participation in any project, etc.
- Lack of stability of a financial source. Depending on the investment, not every deposit will bring its investor a high and, most importantly, a regular income. The result often does not depend on the experience of the investor or the chosen strategy. Often the level of profitability depends on external factors that there is no way to influence.
- Control. Any investment, even one that works for its investor "on automatic", without requiring his personal participation, needs regular monitoring. Regular auditing and monitoring often allows an investor to avoid cheating and to save and multiply their money.
Investing is often nerve-wracking, disappointing and reassuring. However, the final decision on how, how much, and where to invest your free capital to make it grow is up to you as the investor and owner of the funds.
What are the investments like in 2021
The classification of opportunities for investing capital in order to increase it is quite broad. As a rule, investments are distinguished according to a number of criteria, the knowledge of which helps make a balanced decision:
The object of investment can be:
- Real. An investor makes a contribution to tangible assets (real estate, machinery, equipment, etc.);
- Financial. The investor invests money in securities.
- Speculative. An investor invests his money in assets with the expectation of super-profits (buying precious metals/stones, foreign currencies, etc.).
In terms of timing, investments can be:
- short-term (max 12 months);
- medium-term (12-36 months);
- long-term (over 36 months).
Investments are divided by the source of origin of funds. These are:
- public investments from the country's budget. The role of depositors is assigned to large organizations, such as the main financial regulators, i.e. central banks;
- on private capitals. In this case, the investor is a legal/individual person who makes a contribution with his personal funds;
- foreign deposits. Here, the investor is a resident of another state.
There is also a criterion for the origin of the capital that the investor uses. It can be:
- initial investment of funds;
- partial investment;
- absolute disinvestment (in the case of an ineffective project, which results in having to withdraw the invested funds from it).
Investments are classified according to the level of profitability and are:
- average profitable;
Each deposit is differentiated by the degree of risk
- aggressive (high risk);
- moderate (low risk);
- conservative (with a minimum level of possible risks).
Investments are compared according to the liquidity criterion (return on invested funds)
- deposits with average liquidity;
- highly liquid (with a high rate of return).
When evaluating investments, separate attention is paid to their competitive orientation. Deposits can be:
- active (investment with a high level of return, which requires funding and time);
- passive (investment with not very high profitability, but does not demand efforts from investors, i.e. the holder of the capital has made a contribution and regularly receives dividends from it).
In this article, we focus primarily on the topic of private investment, where any citizen can act as an investor.
In order to become an investor, 3 steps are important:
- set a goal of contribution;
- determine the best option for potential investments;
- to form an algorithm of forthcoming actions.
The main priorities of modern investing
Based on the experience of domestic and foreign investors with experience, there are several effective recommendations:
- A clear plan. To make investing a success, it is necessary to plan, predict and understand the scheme of the future process of "working" of the deposit. Having a plan will allow you to adjust your strategy at any stage of the financial project, which will allow you to avoid most mistakes and earn money.
- It is safer to focus on a few areas for capital growth.
- Control and again control. “Being able to wait is important for an investor, but a lot of people just hate waiting. If you cannot put off pleasure until later, you will have to work very hard to overcome this disadvantage”. - Charlie Munger
- It is very rare that you can just invest your money and get a good profit over a long period of time. As a rule, investments require not only control, but also timely making crucial management decisions. This is the key to the desired level of profitability.
- Attention. The investor is always attractive to countless fraudsters, which are more than enough in the network and in real life. It is mandatory to check the data on each potential investment project. "There's a company behind every stock. Find out how it's doing." Peter Lynch, American financier and major investor. It's better to check several times, gather more information before making a final decision to invest your own money.
- Invest the income received in new ideas. It would also be wise to divide the profits. Be sure to put part of the amount into development. Enjoy the increase in income, but at the same time do not forget to develop financially. In other words, make every "free penny" work for the benefit of your capital!
Financial opinion leaders on turning investments into high returns
The goal of every investment is to preserve and multiply your starting capital. You don't have to gain years of experience and make your own mistakes risking your money to make it happen. You can make every contribution to be successful as safely as possible, armed with the recommendations of millionaires and billionaires, opinion leaders in financial circles.
The basic advice of millionaires to beginner investors
- Do not delay with the implementation of the idea. Earlier investment of money gives a chance to get the first profit sooner.
- Learn to take risks. Take risks wisely. The cold mind and exact calculation - the mortgage of profitable investments. Each investment is, in fact, "a cat in a bag". The result can please the financial gain or be a failure, depriving the investment capital.
- Look constantly for investment options. Don't let your savings depreciate.
- Be cautious. If you are just taking your first steps in the investment world, don't choose high-risk deposits. It is better to bet on projects with a low entry threshold (a small amount of start-up capital) and minimal risk.
- Remember to be patient. Do not expect instant returns on your financial investment.
- Study as much as possible. Do not skimp on investing in your own education. Reconsider your attitude toward receiving information. Replace mindless browsing of social media news feeds with reading expert reviews, millionaires' blogs, investor reviews and other useful texts on deposits and investments.
Investment is a well-calculated financial plan, which consists of theoretical and practical "chips", other people's and personal experience, aimed at increasing capital.
The crisis is not a time to be discouraged. It's a great time to make money. Nathan Rothschild, the spokesman for a dynasty of bankers considered the most influential in global financial circles for centuries, used to say: "Buy when the blood is flowing, and sell when the bells are ringing.
Experienced investors know that it is a mistake to pull money out of financial markets, much less cash out in times of crisis. Such a decision will not save money in a period of economic stagnation or recession.
So what decision do experienced investors make during an economic crisis?
Make the most of the bearish trend! We are talking about investing in instruments that are depreciating. It's an elementary mathematical calculation a few steps ahead. Just like in chess. Nothing lasts forever and crisis times are no exception. So why not make money on it?
And while you're thinking about the sources of the most profitable investments, it's worth checking out quotes from owners of multi-billion dollar fortunes made through successful investments. Who knows, perhaps in the words of Rothschild, Buffett, Samuelson, Bogle, Munger and many others, filtered through experience and knowledge, are hidden tips that will be the start of your future wealth.
Financial tycoons from different generations of the Rothschild family
- “The market is a cold shower. You have to get in fast and get out fast”.
- “In order to make an impact on the biggest flows of money, it's important to remember low-interest tactics”.
- “By making regular returns on investments, you'll never go bankrupt”.
- “It takes great courage and great caution to make a great fortune’.
Warren Buffett, entrepreneur (USA), one of the world's largest and best-known investors, whose fortune is estimated at over $100 billion.
- “Don't spend the money you get from your first earnings. Invest them in the development of your business. It's an axiom. And it works’.
- “Don't procrastinate and don't overthink your decision. Always try to think fast; in time you will notice that this is the only way to make money”.
- “Anything that makes people think they can actively trade stocks and do better than if they just sit in the papers and do nothing is a terrible mistake”.
- “The financial market is a device for redistributing money from impatient investors to patient investors”.
- “Investors should be skeptical of models of markets and stocks based on historical data. These models, built by various clever people who use terms that only the "initiated" understand (such as beta, gamma, sigma and the like) - they can make a big impression on you. However, quite often investors forget to understand the assumptions behind all these models. Beware of 'nerds' with formulas”.
Paul Samuelson, economist (USA), Nobel Prize laureate in economics
- “Investing should be like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas”.
- “The stock market has predicted nine crises out of the last five”.
- “We diversify because we can't predict the future”.
- “Markets are not perfect, which is true even for rationally regulated markets”. Nevertheless, over the last thousand years every attempt to organize sizeable societies without important dependence on markets has generated its own failure …”.
The observations of people who have succeeded in making their own way to financial success, hidden in these short but succinct phrases, tell us exactly the important aspects of investing. Want to learn how to manage your money? Reread these quotes from time to time .
Top 7 ideas for profitable investments
It does not matter what is the state or position of the economy of a single state or of the whole world. You can make money at any time.
At any moment, the usual world can change, as the previous year showed mankind, so you need to think carefully about how to protect your finances and keep earning.
Warren Buffett said, “Understanding what not to pay attention to is as important as understanding what to focus on”. To paraphrase him, it's important to learn how to make the most of any situation.
So that our readers don't waste their time searching for the best ideas for active and passive income, we decided to narrow it down and present the TOP list of the most attractive ways to make profitable investments, relevant in the realities of 2021.
Opening a deposit account at a bank is considered popular and one of the safest options for securing passive income.
Anyone with a bank account number can invest in a bank, i.e., open a deposit account. Each bank has a minimum initial deposit amount. Bank deposits can be short-term (from 30 days to 6 months) or long-term (from 12 months and over). The longer the deposit contract, the more profitable the deposit will be.
In other words, an investment in a bank deposit will not bring superprofits, because banks rarely offer high interest rates. However, having even a small deposit, the investor can provide, if not high profits, then protection of his funds from inflation.
Features of opening a deposit account in a bank
Before entrusting his capital to a bank, the potential investor must find out the following information:
- the reputation of the credit and financial institution;
- at what interest rate the bank plans to take your money;
- on what terms and conditions will the cooperation between the investor and the bank be carried out (rules for changing interest rates, withdrawing/replenishing the principal amount, managing dividends, etc.);
- bank service fees;
- a loyalty program for you as a depositor, etc;
If the bank "breaks", through the Deposit Guarantee Fund the state will return the deposit to the investor. However, there are nuances. You should find out in advance on what terms, within what time frame, and what percentage / amount of compensation will be refunded in the case of bankruptcy of the bank.
Advice: Invest in different banks, which belong to different structures and, possibly, to different states.
Investing in Residential/Commercial Real Estate
The purchase of square meters in a residential property or as a commercial property is the best solution for investing funds. The main thing is to choose the right location and format of the object.
As a rule, real estate can make money in the following ways:
- Resale. Buy an unsightly object, upgrade it and sell. By the way, investing in the facility under construction can bring higher profits on resale. However, in order not to run into a long construction period, it is important to carefully check the builder.
- Leasing. This option is suitable for large cities, resort areas, towns where there are many universities
Advice: Sometimes investing in overseas property is a more profitable and promising investment than a similar investment at home.
Investments in Currency Benchmarks
You don't need any special knowledge or significant capital to speculate on the foreign exchange market benchmarks.
Just keep your savings in different types of currencies. Bet on the representatives of the basket of reference currencies. Currently, these are the U.S. dollar, the pound (UK) and the single European currency (Euro). It is possible that soon you will need to keep an eye on the currency unit of China.
Depositing in different currencies allows you to earn income due to exchange rate fluctuations, which have kept financial markets up recently.
Advantages of investing in currencies:
- this type of investment is considered low-risk,
- does not require a big start,
- it is perfectly suitable for beginning investors,
- ease of management and control;
- high chances of profit growth, which can be received/withdrawn at any time.
Currency speculation is available in several ways:
- buying/selling in exchange offices;
- participation in the forex exchange.
Advice: For currency investment choose the most reliable financial company and follow not only the mood of the financial markets but also the main political news in the world, which have a direct influence on the exchange rate.
Investing in precious metals and stones
Thinking about investing for the long term? Why not pay attention to precious metals and stones (gold, silver, platinum, palladium)? This type of investment will reliably protect the investor's capital from risks and losses. One nuance, the market of precious metals and stones is one of the most stable, so you should not expect high profits from such investments.
What an investor should know about precious metals?
- Bank Precious Metals. When you buy bank bullion, it can be stored in a deposit account, in a safe deposit box, anywhere outside the bank.
- Precious metal coins. When investing in platinum, silver or gold, an investor should consider several valuation parameters: weight, numismatic value, exchange rate fluctuations;
- Securities of precious metal miners. Investing in the securities of brands that mine, process or sell precious metals/stones can yield a steady income;
Advice: investing in precious metals will provide capital preservation, but does not promise capital growth. Therefore, it is better not to devote more than 20% of your investment capital to this option. If you have to choose between precious metals investment options, as a rule silver shows the highest rate fluctuations.
Investing in securities
Investing in securities is a tool for both active and passive income. Before investing in stocks and bonds, it is important to find an experienced and as honest broker as possible. Only then will you be able to make money. There are many simulators available online that allow you to understand the principle of making money from investing in the securities of companies and companies.
Why is investing in securities in demand among investors?
- Good choice. The ability to choose among the many proposals bribes investors. And further all depends on the strategy, ability to analyze the information, to predict for a step forward.
- Opportunities. Holders of the shares have high prospects to get a good profit, choosing securities as an object of investment on long-term and short-term conditions;
- Loyalty. You don't have to be a millionaire to invest in a block of securities. Beginning traders can start by investing in inexpensive stocks, such as young but promising companies;
- Freedom. Purchase of securities is not limited by geographical criteria.
- High level of liquidity. Need money? Enough to sell assets, getting for them the current market value. With a competent strategy, the amount of sales can be substantially higher than the amount spent on their purchase.
Advice: do you want to ensure a high return on your investment? Invest in securities of trusted companies. And remember: To protect against the risks in this case, as well as in any other, it is worth resorting to diversification of your investment portfolio.
Investing in a business
Financing on your own or in someone else's business idea is one option to generate income.
Given the limits caused by today's realities and related changes in the business environment, you should expect profits from investing in the following business areas in 2021:
- delivery companies ;
- call-center services;
- food trucks;
- any IT business (including programming, design, etc.)
- services and companies aimed at remote learning, etc.
Advice: Effectively invest in a business that you are willing to monitor on a regular basis. Otherwise, it is not easy to count on a return on investment and profit.
Investing in cryptocurrency
Digitalization has affected all areas of humanity. In the 21st century, the topic of digital money created on the blockchain becomes especially popular. The current year started for cryptocurrency markets on the rise. Millionaires are actively investing in cryptocurrency. Bitcoin is showing record numbers, new cryptocurrencies (altcoins) are emerging at a rapid pace. Perhaps this is a chance to become its participant and grab a piece of this financial "pie"?
There are several options for an investor in the crypto market to make a profit:
- short-term investing. Participation in exchange trading through brokers or directly on the stock exchange. You will be able to earn on exchange rate fluctuations.
- long-term investing. Hodl as an alternative participation in the role of an active trader. In this case, the investor sacrifices immediate profit and invests for the future;
Advice: The market is new, so it requires careful study. It is better to bet on the top 5 cryptocurrencies, such as Bitcoin, Ether, etc. Investing in the crypto market is suitable for those who are ready for crazy volatility and risk.
Let`s summing up the above said facts and tips
The market offers several effective and profitable investment options. When choosing the best way to preserve and multiply your capital, you need to be careful with such criteria as risk level, purpose of investment, and permissible amount of capital.
It does not matter which option suits you, as long as your capital "works", avoids high risks and brings profit.
Read, analyze, choose and earn as much money as possible!