The world of finance can seem like a chaotic field of swirling numbers and percentage signs—especially to those with an aversion to math. It’s complex, full of jargon that’s difficult to digest and often reserved to those with experience or degrees in the industry. Does this mean that the large number of financially-illiterate folks can’t get past the pearly gates and get into the lucrative investment scene — which now includes all types of green investing that can help the environment? Not at all.
Strategic investing can—and should—be done by everyone, and there’s a number of methods through which it can be achieved. Even if you don’t know the difference between stocks and bonds, there are investing tools you can use to effortlessly make your money go a bit farther. Here are the five most common investment strategies, beginning with the easiest and ending with the savviest.
1. Investment Apps
New software has facilitated the creation of apps and tools, such as Acorns, that enable their users to invest in stocks and bonds through “micro investments.” To create an investment portfolio, all the account holder needs to do is link a credit or debit card to their account, and each purchase made with the associated card provides an investment for the future. The software automatically rounds up the transaction total and automatically invests the spare change across 7,000 diversified accounts. You can watch your portfolio grow over time without having to actively monitor or contribute to it.
2. Retirement Accounts
What better way to invest in the future than with a retirement account? There are many types of retirement vehicles, but the two most popular ones are:
- 401(k): These retirement accounts are offered by employers, who may or may not match a percentage of their employees’ contributions. The funds enter the account tax-free where they grow over time, as the plan’s provider automatically selects an investment portfolio based your determined level of risk comfortability. The money is not taxed until it is withdrawn—only after age 59½.
- IRA: Similar to a 401(k), an Independent Retirement Account (IRA) grows tax-deferred over time, and both accounts’ contributions may be tax-deductible. The major differences are that anyone who’s under the age of 70 can participate in and IRA—not just those whose employers offer them—and account holders are responsible for creating their own portfolio.
Each of these methods can prove to be extremely effective in growing your overall net worth and value. While most individuals might think of their personal finances in the moment, it’s the actual long-term growth and passive income that can be built over time — which will have the biggest impact.
3. Real Estate
Real estate investments are tangible. Your investments in stocks are typically within the hands of others and vulnerable to volatile markets, but real estate assets can be physically monitored for greater peace of mind. Purchasing property to fix-and-flip, rent out on sites such as Airbnb, or lease to tenants can build sizable income. The latter option is most common amongst entrepreneurs who want a long-term investment to provide dependable monthly income. With the right tenants and a strong lease renewal agreement in place, investors can rely on $X going into their bank once a month for X amount of time.
4. Day Trading
If you don’t have the capital to buy into real estate, but feel confident enough to play the stock game, try your hand at day trading. This investment strategy works by buying and selling securities within the same day—or even multiple times throughout the course of a day—to take advantage of short-term price fluctuations. Be careful, however; while day trading can be very lucrative, it can also be very dangerous if not done correctly or adhered to properly. Day trading, swing trading, and position trading are not technically considered “investments”, which aim to build profit long-term, but they do utilize the same strategy: Buy low and sell high.
Cryptocurrencies are particularly confusing and should be reserved for only seasoned investors. A cryptocurrency is basically a digital asset designed to work as a medium of exchange, and like real currencies, allow their owners to buy goods and services online. Investors are interested because they speculate that cryptocurrencies, which are not regulated or backed by a government, may be the payment method of the future. The strategy is to procure them before they become less available and presumably more valuable, at which time they can sell them back at a higher price. As with any type of investment, speculation will always be risky, but if you’re interested in trying, you can find sites such as AvaTrade that allow for their exchange online.
After this quick read, you should already feel more comfortable about common investment strategies. Spend a bit more time researching your options are you could be well on your way to stretching your dollar much farther. And green investing is definitely a niche you should consider on this wider spectrum.