For many people who don't have big salaries or multiple sources of income, an investment asset looks like a flying pig! Something they could not have even if they worked their whole life faithfully without ever sleeping, and yet an asset can be something so essential and habitual as little as a gold coin that you buy with a portion of your monthly salary. It may also be your old house that you abandoned years ago. Also, the liquid funds available in your bank account are assets.
There is no doubt that the process of gaining assets is difficult and requires a lot of time and sincere saving; however, nowadays it is easy for almost everyone to diversify their income sources by working on a small business, taking a job online, or even by betting on casino games and following strategies for playing blackjack.
There are different types of assets that you can consider owning, such as cash assets, stocks, real estate, high-value commodities, hedge funds, and other investments. Each type of investment has different characteristics in terms of risks and returns.
In this article, we will look at the different types of assets you can invest in, some areas will seem obvious to you; So please excuse us if we oversimplify, while some other fields may seem complicated, so please consult your financial advisor before taking any investment step.
Cash assets
The essential type of investment is liquid cash, it is an asset by se and can buy other assets. On the surface, there is no risk in owning a lot of money. Keeping your wealth liquid means that you are able to buy anything whenever you want without a need to take loans. However, in the long run, there are some risks associated with the cash assets.
First, your money in the bank will not increase in value at all unless you live in a country with high inflation where bank interest rates tend to be higher. Moreover, you may get a lower interest than the actual inflation rate, so your money value will decrease over time. So let's give things their proper definition: putting money in the bank is saving, not investing.
Banks want to attract the largest possible amount of depositors' money to lend to individuals and companies and obtain interest upon these loans, then the bank shares this interest with depositors.
Of course, the risks are almost non-existent when depending on these assets because the bank pledges to release any money on your account when request. In addition, central banks themselves undertake to return depositors' money if the bank collapse.
As we live in the flourishing era of the peer-to-peer idea, peer-to-peer lending is gaining ground also. In this type of lending, you will give money to a person or company under legal guarantees and get higher interest than in the bank, then you will get the total of your lent money and interest in periodic instalments. However, peer-to-peer loans have a high risk; banks choose well the people and companies they lend, while individuals may get scammed.
Stocks and Bonds
Most companies need financing to keep their business going, increase their production and achieve greater profits, so they list the company on the stock exchange and specify a certain number of stocks to be traded among individual investors, banks, hedge funds, companies and other institutions. Whoever owns all the firm’s stocks owns it, and whoever owns a large share of the company’s stocks owns a large percentage of its ownership, besides getting a large portion of the net profit. Investing in stocks and bonds offers a gain of 10% annually on average; however, this type of investment is hazardous. Also, there is difficulty in liquidating your shares especially if the demand for them is not high. Therefore, it is imperative that this investment offers you a higher return; otherwise, it will be useless.
For a company to be listed on the stock exchange, it must comply with regulations and laws imposed by the financial control authority. In addition, news and updates about all the company's activities should be published.
You can get your profits from the stock exchange in two ways - capital appreciation and dividends.
The stock price is determined based on supply and demand only. If the stock is in demand while the available stocks are limited, the prices will be high. Likewise, if the demand is low while the supply is high, the prices will fall.
People turn to buy shares for reasons such as historical sales, news of its acquisition by another company, expansion into foreign markets, historical profits, and other reasons. However, we must not forget that stock prices are very volatile; they have ebbs and flows like the tide for reasons beyond the control of the firm itself! For instance, the company’s stock price can easily collapse due to debt accumulation. It may face intense competition in a new market, or unexpected circumstances can occur that push its sales down like what happened in 2020.
Real Estate Investment
If you own two or more apartments, you have already entered the real estate investment domain! You can sell one of your apartments and get a good profit. If you don’t want to give away your valuable possession, you can rent the flat for several years.
The quality of real estate investment depends on the type of property you own, the purpose for which it is intended, its area, and other factors. In general, homes tend to be much cheaper than offices, stores, and shops.
Real estate investing shares some features with investing in stocks and bonds, as both yield capital gains when rents are raised. Also, both of them aren't liquid assets and need some time to be converted into cash.
Although this investment requires a large amount of liquidity, monetising the funds isn’t easy. Therefore, it may not be suitable for people with limited liquidity and wish to diversify their investments. The solution, in this case, is to turn to one of the real estate investment corporations. However, many real estate corporations are borrowing money to expand their investments, which makes investing with them riskier.
About the author
Hey, kinfolks! My name is Daniel Klink. My academic education revolved around technology and gaming. Now I am the Director of Marketing and Content at Arab Casino HEX. My main goal is to provide helpful information to my readers about the unique and ever-evolving world of games. If you want to know more details about my work and goals, click here: https://arabcasinohex.com/author/danielklink/ !