You’ve lived frugally, earning more than you spend, and after a number of years, you have a significant amount in your savings account. You’re now ready to invest your money to multiply it. Alternatively, you’ve inherited money and rather than get a new house, you would like to use this money to build an investment portfolio. Despite these different scenarios, you still have to compare different investment opportunities and stack them up against each other.
Some Investment Ideas
With this in mind, let’s take a closer look at some popular investment opportunities that appear highly promising and that you might find interesting:
Bitcoin versus Gold—which is better? A good argument can be made for either one.
Although gold is no longer used as a way to back the U.S. dollar, still the world’s reserve currency, the precious metal is still important to the international economy. Financial organizations like the International Monetary Fund and central banks continue to hold a fifth of the world’s supply of gold. Consequently, gold is considered a hedge against a decline in the dollar, a rise in inflation, and a safe haven in countries with political and economic tensions. You can own gold as futures, coins, companies (e.g. gold mines), ETFs, mutual funds, bullion, or jewelry.
Bitcoin is now being called the new gold. It’s dubbed “digital gold” for one simple reason—like the precious metal, it’s in limited supply. Additionally, it’s volatile enough for prices to rise. Since it’s not controlled by a central bank, nor by any particular government, it’s a good hedge against unstable economies. In essence, it’s outside the system and can’t be manipulated. With all other currencies, which are all based on fiat money, a government can print out as much as it needs. Like reward points for flight miles, the government can decide on the rules, changing them when they want.
Bitcoin, on the other hand, is not based on standards decided by government officials. It’s created with resource-intensive computers and distributed through a computer network. According to Bobby Lee, who is the CEO and co-founder of BTCC, which is one of China’s 3 biggest bitcoin exchanges, “The philosophy of bitcoin is that it’s a limited digital asset,” Lee says. “There’s only 21 million bitcoin. The smallest amount you can get is not one bitcoin, you can get fractions of bitcoin. But if you own 1 bitcoin or 0.1 bitcoin you’ll forever have that percentage of the world’s supply. No one can dilute you. In that sense it’s very attractive, it’s very unique.”
Another popular option when it comes to investments is getting into real estate. Property investments are one of the oldest wealth-building strategies. Still, despite its long history, it’s not an infallible way to make money. When people invest in property, they are playing the long game, expecting the property to increase over many years, despite some dips in housing prices. The upside is that you can make money when you let the property or flip it by buying low and selling high. The downside is that it may take a long time for you to get a positive return on your investment. The cost of the property could be high. Maintenance costs could escalate. And it may not always be easy to sell the property quickly.
Making a Decision
When it comes to investment opportunities, here are two rules of thumb to help you make a good decision.
1. Play to your strengths. Only invest in something you are interested in. If, for instance, you don’t understand the complexities of advanced technology, then it is better to focus on traditional investments. Conversely, if you’ve spent your entire career in the high-tech industry, then focus on investment opportunities there.
2. Diversify. It’s not a good idea to sink all of your money into a single investment vehicle. It is far better to diversify your investments. Instead of trying to decide between gold, bitcoin, real estate, if those happen to be of interest, get a slice of each. This way, you’re not relying on the predictions of financial pundits alone to decide your future.
In closing, it’s important to mention that regardless of your choice of investments, you must not only rely on professional people who can give you advice and facilitate your transactions, you also need to be well-informed, too.