There are many reasons why people invest. Whether to supplement their pension while saving for retirement, make the most out of their money, supplement their wage with some passive income or to make a fast buck with a risky gamble, the investor market attracts millions of people from a wide range of backgrounds. It can also, however, be a daunting and mystifying prospect to the newcomer, especially with a multitude of experts and services rendering (often contradictory) advice. If you don’t know your dividends from your derivatives, it can be difficult to know where to turn. While most will cite property, bonds and securities as ‘safe’ investments‘, it’s worth remembering that no investment is completely safe. Plus, the safer the investment, the lower the yield you can expect. Take Certificates of Deposit (CDs). These are fixed term loans that you make to your bank. These can tie up your cash for years at a time with pitiful yields at the end. Investing $1000 in a CD for a year will typically yield less than $5 upon maturity. Sure if you have $100,000 to invest it may be more worth your while, but that’s a lot of cash to tie up for 12-18 months.
For those with a sense of adventure, there are some investments that are accessible for the newcomer while steering clear of the well trodden ground that most new investors are steered towards.
You may have heard of the ‘Bitcoin Bubble’, but if that sounds like a mobile game, allow us to enlighten you. Bitcoin is a decentralized, completely digital cryptocurrency that has no presence in the physical world. Unlike centralized currencies, its value is not determined by the value of precious metals, nor by the GDP of any given country. Unlike other currencies it can also be traded anonymously. It is attractive to investors because it is beholden neither to bank or government controls it so it is impervious to economic recession and depression, making it a desirable commodity in the post credit crunch era. Bitcoin’s value is determined by the individuals and businesses that invest in it and its value is currently at an all time high. It is also fairly tax favorable as it is taxed as property rather than currency. It can also be moved around the world without fluctuations in value or excessive bank charges.
Derivatives are contracts between two or more parties that derive their value from an underlying asset such as a stock or bond. Among the most commonly traded derivatives are CFDs or Contracts For Difference. If you’re looking for a long term investment, it’s worth finding out more about CFDs. Simply put, investing in CFDs allows you to speculate on the rise or fall of fast-moving financial markets, such as shares, commodities or even currencies. If you believe a prices will fall, you can opt to short (or sell) or go long (buy) if you believe that they will rise. As such, there’s usually a good chance of a high yield.
Velben goods are always something of a gamble but they’re also a fun and unorthodox form of trading. A velben good is a good for which demand increases in proportion to how the price rises. Most collectibles are velben goods, as are investment wines.
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