Choosing to invest funds now can be an effective way of growing your capital and creating a nest egg for the future. However, you’ll want to assess your options carefully to ensure you find an investment opportunity that meets your needs and gives you the best chance of making an impressive return.
When people consider investing, they typically focus on the stock market. While buying stocks, shares, bonds and ETFs can be a viable way to invest your funds, there are other options out there. If you want to grow your capital, take a look at the alternative investments you could make in 2021:
If you’ve heard of Bitcoin, Litecoin or Ethereum, then you’re already familiar with cryptocurrency, but did you know it can be used as a form of investment? People typically invest in cryptocurrency in one of two ways.
Firstly, you can purchase a major form of digital currency, such as Bitcoin or Litecoin, and sell if and when its value increases. Secondly, you can buy a lesser-known currency, like Fusion and hope that the price will increase rapidly before selling.
However, it’s important to find a reputable cryptocurrency exchange if you want to explore this type of investment. Furthermore, many jurisdictions are now making these types of investment taxable, so you’ll need to consider what impact this could have on any returns you make.
Property is still one of the most popular forms of investment out there. People believe that property tends to hold its value, which makes it lower risk. While there’s no guarantee that you’ll get a return with property investment, a significant number of people do.
Furthermore, buying property can enable you to grow your capital but you could also generate rental income in the meantime. If you find a family home or penthouse for sale, for example, you could lease it to tenants and hope it rises in value at the same time.
When you decide to sell, an increase in value will equate to capital growth, while the rental income you’ve generated can be used to repay a mortgage or financing loan.
Alternatively, you may want to purchase a property that’s in need of refurbishment, with the aim of renovating it and selling it quickly to make a profit. Although this can be lucrative, it does mean you’ll need to finance the refurbishment and find reliable tradespeople to undertake the work.
Investing in a business could give you the potential to grow your capital exponentially, providing the enterprise is successful. Whether you choose to start your own business, become a silent partner in a new start-up or fund the expansion of an SME, there are various ways to invest in commercial organisations.
It’s worth bearing in mind, however, that this can be a very high-risk investment strategy. Sadly, a significant proportion of small businesses fail relatively quickly. If this happens, your capital will be lost, and you won’t generate a return at all.
If you’re comfortable with this level of risk, there are plenty of platforms designed to connect businesses with potential investors. By finding a company you’re interested in or a start-up you feel you can help, you could have a positive impact on their business performance and increase their chances of success.
4. Peer-to-Peer Lending
When an individual wants to take out a loan, they usually go to a bank or building society. However, peer-to-peer lending provides an alternative form of borrowing.
As a peer-to-peer lender, you would be allowing individuals to borrow money from you and to repay it in instalments. Your profit would come from the interest they pay, in addition to their capital repayments.
There are numerous peer-to-peer lending platforms available, so it’s relatively easy to establish yourself as a lender. However, they do all have varying policies, so be sure to read the terms and conditions carefully before you make any financial decisions. If a borrower misses repayments, for example, you’ll want to know exactly what your rights are.
You don’t need much capital to start investing in peer-to-peer lending, which makes it popular with people who want to try investing for the first time. Furthermore, you can make numerous small loans to multiple lenders to try and reduce the risk of borrowers defaulting on their loans.
If you have a particular interest, hobby or passion, collectables can be a fun way to invest your cash. Coins, toys, first-edition books, rare albums and comics can all fetch a high price, providing they’re in mint condition. Rare Pokémon cards can sell for thousands of pounds, for example, which can make them a lucrative investment, if you can find one!
Although investing in collectables can be a way to combine your hobbies with your finances, it’s a high-risk strategy. Knowing which current trends will be collectable in the future is tricky and there’s no guarantee of success. Additionally, it can take decades for collectables to increase in value, so you may not make any money for quite some time. Furthermore, you’ll need to store your collectables safely and securely to ensure they don’t succumb to damage while you wait for them to amass value.
Finding the Right Investment
Before you decide where to put your money, it’s important to consider every option and determine how much risk you’re willing to take. Seeking professional financial advice can help you to establish which investment opportunities are most suited to your needs.
If you’re apprehensive about managing your own investments, you could always use an established fund and trust an investment manager to make decisions on your behalf. You can choose a high, medium or low-risk fund and benefit from the expertise of a professional investor, which could increase your chances of generating a return.
Although investments don’t guarantee profits, they can be a savvy way of growing your capital. Providing you manage the risk appropriately and make long-term decisions, investing your funds could be the ideal way to finance your future.