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What are the Best Ways to Invest Money?

What are the Best Ways to Invest Money

Everyone has heard the phrase that “money should work”, but it is quite difficult to make them work, that is, to find the ways of investing funds. So it’s time to talk about how well-invested money can make a contribution to your personal budget and what investment options exist.

There are several important points that are important to learn before you decide to invest your savings in anything.

4 golden rules for investing

  1. Never invest credit funds (except for the only way, which will be described below);
  2. Invest free money – you must not use the finances necessary to pay for tuition, treatment and other compulsory expenses;
  3. Evaluate not only the profitability but also the risks – you should not hope that you will become the lucky one who will still hit the jackpot;
  4. Share the risks – it is scientifically called “diversification” (in simple words: “don’t keep all your eggs in one basket.” Even the most reliable tools have a chance of failure. It will be a shame to lose everything.

Now let’s move on to examples, methods and calculations.


A share is a security that gives the holder the right to receive a certain income. Many novice investors refuse this method of investing capital, as they are afraid of incurring losses. If you do not understand the peculiarities of the stock market, you can contact a professional broker. The intermediary will select effective ready-made strategies.

When choosing a way to invest money, you’d better buy shares of state and large companies (eg. banks). Investments in them are accompanied by lower risks.

There are two main ways to make money on shares:

  1. 1Receiving dividends. Many issuing companies pay a fixed fee to shareholders. The final decision on the transfer of dividends is made based on the results of the financial year. The basis for determining the number of payments is the company’s net profit;
  2. Receiving income from the sale of securities. For example, if an investor has acquired a block of shares worth $5,000, and after 9 months its value was $7,500, the securities can be sold. The income from the sale will amount to 2,500 excluding taxes.

Important: individuals cannot enter the exchange on their own. To do this, you need to open a brokerage account. This can be done both at the bank and at professional participants in the securities market. It is more profitable to open an account through a broker, as banks charge large commissions.

To open an account, you should contact the office of the company and sign an agreement. Many brokers offer to do this online. An individual investment account is very popular.


Bank deposit is one of the most common investment methods. It will not bring super-profits. The average profitability varies from 4 to 7% per annum, but the risk is minimized.

When choosing a bank, pay attention to whether deposits are insured by the Federal Deposit Insurance Corporation (FDIC). If a credit institution’s license is revoked, you will not lose your money.

You can receive profit on the deposit at the end of the term (the amount of interest is added to the initial deposit) or on a monthly basis. In the second case, the interest goes to the client’s card or account. Money can be withdrawn.

The deposit rate depends on whether it is possible to replenish it, as well as withdraw money from the account. The maximum percentage is offered on deposits without the possibility of withdrawal and replenishment. The rate will be lower if you carry out transactions on the account.

You can also consider opening a savings account. Large US banks offer a rate of 4-6% per annum. At the same time, you can make a profit on a daily basis.


When choosing where to invest money to make a profit, many investors prefer bonds. Their main difference from shares is that the holder receives a fixed income, the amount of which is known in advance.

There are two types of bonds:

  1. State bonds. Their goal is to attract additional funding from individuals. By purchasing state bonds, you provide the state with a certain amount of debt. Large financial investments are not required. Investors who have owned state bonds for at least three years can get large profits. Average profit is 6% to 8% per annum;
  2. Corporate are debt securities of companies. You can buy bonds from large corporations and get a yield higher than on a bank deposit. Please note that the risks are also small in this case.


Where to invest in order to get profit every month? For example, buy real estate. You can purchase both residential and commercial properties.

Real estate is a liquid asset that can rise in value over time. The most common option is to purchase a house or other object at the “excavation” stage. In this case, you can count on the minimum cost per square meter.

There are two ways to make money on real estate:

  1. Rent it out and receive income on a monthly basis;
  2. Implement the object. The cost of a “square” increases at each stage of construction. You can sell an apartment in a few years at 1.5-2 times more expensive, and reinvest the profits.

Precious metals

Another common way of investing money is buying precious metals. These include palladium, platinum, gold and silver. Choose this way of investing if you want to make a profit in the long term.

Investments in precious metals are long-term. It is also important to note: if you own precious metals for less than 3 years and sell them, income will be taxed. If the assets have been owned for more than three years, you do not need to declare profit and pay personal income tax.

You can also open an impersonal metal account. In this case, you do not need to buy precious metals. The investor deposits a certain amount into the account. It is converted to grams. You do not trade in precious metals, so you do not need to pay income tax. The return on investment is directly related to the growth in the value of precious metals.

Microfinance institutions (MFIs)

The average return on investments in MFIs is 20-25%, but investments are accompanied by risks. Individuals in U.S. can invest in microfinance companies.

Risk and return are linked in investments. The higher the profit, the more risky your investment is. Stock and bond returns are not guaranteed.

If you do not want to think over strategies on your own and analyze the stock market. These are:

  1. Mutual investment funds;
  2. Individual investment account with trust management.

Mutual funds

A mutual investment fund (MIF) is one of the forms of collective investment of money. This is a portfolio that includes several assets (securities – stocks and bonds, currency, and other financial instruments).

It is problematic for a novice investor to “select” the right set of financial market instruments. It is necessary to correctly analyze the market situation by choosing liquid assets. In this case, all the work on the formation and management of the mutual fund is undertaken by professional managers. They carry out various operations aimed at increasing the funds placed by investors. This can be the purchase and sale of securities, as well as currencies, the issuance of loans, etc. The investor can only track the results of the work.

The profitability of the mutual fund depends on how the value of the share has changed. Investments are not insured by the state, so investors can both earn and lose their money.

Important: the work of mutual funds is controlled by the state, as well as by a specialized depository. They monitor the actions of the management company in order to comply with the interests of investors.

There are two ways to earn money on shares:

  1. Redemption of shares owned by the investor. In this case, the management company compensates the participant for the full cost of the share in cash;
  2. Realization (sale) to another person. You need to find a buyer and complete a deal.

Let’s sum up

There are several investment options on the market to get monthly profits: bank deposits, buying stocks and bonds, real estate, mutual funds, investments in MFIs, trust management. When choosing a method, it is important to pay attention to the level of risk, the amount of available capital, as well as your own goals.

If you want to start investing in stocks, you need to choose a reliable broker and open an account. The most popular type of brokerage account is an individual investment account.