Should you be in a position to invest, it can be tricky knowing where to channel your funds. Whether you’re new to investing and need some direction or you’ve hit a wall and want some ideas to help diversify your portfolio, understanding the investment opportunities available can be incredibly useful.
To help you steer your investments, here is a look at the different channels that are available and how they work.
The London Stock Exchange is one of the oldest stock markets in the world, with its beginnings dating to the 1500s. Today, it continues to provide one of the go-to investment opportunities and is predicted to be a safe investment in the coming years.
Stocks are probably the most straightforward means of investment. They are often referred to as shares as they are investments in a share of a company and its profits. If you own stocks, you’re known as a shareholder and this implies that you own a portion of the equity of the company. How much you own depends on how many shares you buy and how many are available. If you
The way stocks are traded has evolved over time. It’s changed from trading in-person on the floor to becoming an online opportunity that allows investors from around the world to stake their claim when they see an opportunity.
Indexes take the values of stocks from across several companies and groups them together in one average. This allows you to diversify your investment across several stocks at once, spreading your portfolio.
You can invest in stock indexes without having to worry about paying fees for a money manager. This means you have the potential for slightly higher returns than with other types of investments, such as mutual funds, which use money manage to oversee your investment. However, your returns are totally based on how well the index your fund is performing at.
Some of the most well-known indexes are the Dow Jones and Nasdaq, which is an index fund that exposes investors to some of the major tech companies and offers diversification for your portfolio. However, Nasdaq expects investors to commit to holding the investment for at least three years, so it’s a commitment suited to those versed in investing.
Digital currency has become big business in recent years, with well-known names such as Elon Musk championing bitcoin, one of the most recognisable types of crypto. However, cryptocurrency isn’t that new. Web-based cash gained traction in the 1990s, when several developers launched their own digital systems.
Today, prices for crypto are soaring and more traders are getting involved with this new type of money. Bitcoin is the most traded, with its price fluctuating dramatically from under $10,000 in 2020 to triple that at the start of 2021.
It can be a good investment if you’re not risk averse. Digital currencies are volatile, and the price depends on what traders will pay. There’s the additional risk of hacking. While there are security measures in place to prevent blockchain, the digital record-keeping ledger that stores cryptocurrencies, from being infiltrated, as with any type of technology, this is still a factor to consider.
Where you invest will depend on several factors, but it all comes down to how much you have and how risk averse you are.