8 Assets That Will Propel You to Financial Success
vemuda.com - Pretty much everyone on earth will have their own opinions on what financial success means to them.
Some would define financial success as having all the money they need to take care of their families, and have a comfortable home to live in, while others would feel financially successful if they can retire comfortably with no debts, and someone else might think it means having millions to give away and take care of the needy and so on.
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In whichever way, you may looks at it, being financially stable is something that removes a lot of stress from a person. It means - Not having to worry about how your family will eat, or where they will live. This is akin to a huge weight lifted off one’s shoulders.
The fact that there are systems and strategies in place to assure you of financial success is comforting. One way of doing this is through investing in assets that can increase in value over time.
Being able to determine the right or suitable assets to invest in requires knowledge, values, balance and a clear perspective of what goals you want to achieve. So, follow along if you’d like to look at the different kinds of assets you can invest in to gain financial freedom.
Now, let’s get into it.
A bond can be defined as a loan from an investor to a borrower. The lender can be the public, an individual or whole companies. In most cases, the borrower is the government or a corporation.
Information such as the terms of payment or the interest to be paid, as well as the maturity period, are always detailed. Bonds are assets that can be traded.
In most cases, they provide a fixed income to the lender. The interest rates are always fixed, which means that you know exactly the amount you’ll get when the bond matures.
This means that you can rest assured that your wealth will always grow. You will have to do your due diligence when picking a bond so you know which asset can fit your investment portfolio. This is a secure way of achieving financial success.
A stock is a security which gives the holder ownership of a part of an organization, business or corporation. The owner gets a proportion of the assets and profits made by the company. How much is given depends on the amount of investment that has been made. Each unit of stock is referred to as a share.
The process of buying and selling of stocks is done under government laid down regulations to ensure investors are protected from malpractices that can lead to loss of their investment. Buying and selling of stocks are most commonly done on the stock market.
Almost every country on earth has a stock market, in the US, their several, The NYSE, The Nasdaq, and so on. In the UK they have The London stock exchange, and In South Africa, they have the JSE (Johannesburg Stock Exchange).
To make it easy for investors today, there are many stockbrokers that operate online. Due diligence needs to be done though; you need to identify genuine brokers.
Individuals can also buy and sell online. For those who have invested long-term in this asset, the rewards are normally huge especially if the company is doing well and the share price is consistently on an upward trend. This also means that the dividends are also good.
However, like any asset, stocks are not immune to various unforeseen market changes that can adversely affect the stocks. But in general stocks will positively impact your wealth.
Diversifying or investing in different stocks is often a wise decision to mitigate any risks as there is no guarantee on which direction a company can take, which may impact share price and dividends
Real estate can be termed as real property, which is basically land and anything that is attached that is permanent. Real estate may come in the form of plain land with nothing built on it, industrial, commercial property, or even residential.
Real estate is commonly known as one of the highest appreciating assets. Most people have secured their wealth through buying and selling real estate, building rentals for both residential and commercial use, building and selling property, farming, and so much more.
When you buy property and hold it for some time, you are likely to make more money than when you just buy and sell. The time factor is very critical in this asset as they tend to increase or appreciate in value with time.
You might buy land in a very deserted place but when you give it some years, you will find that more buyers have come into the area and developed the place making it more valuable than it was before.
Most properties tend to appreciate with time, and it is hard to get property depreciating in value unless in an area with buildings that are left unattended, and people have deserted the area for years. Even in this situation, the land itself will continue to appreciate in value.
Although real estate is a very attractive asset to grant one financial success, it also comes with some risks that one needs to research and be aware of while investing.
In some parts of the world some have experienced a real estate bubble, although it generally runs for a short period of time but can adversely affect this asset. There are also many conmen and fraudsters in the field that can lead to one making losses if proper due diligence is not done.
But you needn’t worry too much. With thorough investigations and laws in place to protect you, real estate remains a lucrative and (to a large extent) beginner-friendly way to attain wealth.
4. High Yield Saving account
A high-yield saving account will generally give you more interest than a normal savings account. However, the risks of the high-yield account are more than regular accounts.
In this world, everything has a risk, but the smart way to go about it is to understand the risk and put some mitigations in place. This asset will offer you a good interest rate on your investment, and the more you invest, the better the pay. The rates will, of course, be affected if the economy is in a struggling phase but in most cases, you still get a handsome return.
When you invest in this asset it is paramount to do research to determine the legitimate players in the market who have been tested and have made a name for themselves with a good reputation. This will lower the risk of being conned and losing your investment.
Many people have become financially secure from investing in high-yield savings accounts. While a typical savings account may make you feel safer, the returns you get are very little. Take a chance and get yourself a high-yield account if you’re looking to gain financial freedom.
Collecting knickknacks is a common hobby that many have. The surprising thing that many of us don’t realise is just how valuable some of this stuff can be. Even if you have to spend money on the collection process, come sale time you’ll be pleased with the rewards you reap.
The main risk here is that you cannot predict if the items or assets will offer a good price in the future. This is where research comes handy; you’ll have at least a rough idea of what similar items are currently worth. This mainly applies if you are a new collector.
For seasoned collectors who have been in the market for a long time, this is easy as they have gained experience with time. Here are some lucrative collections you can start:
- Wines and spirits which have been aged or matured for many years. They are scarce in the market.
- Pieces of fine art. You should be aware that purchasing the paintings can be expensive, but if you pick the right piece, you’ll get your money’s worth. Look out for renowned artists and those who are currently gaining popularity. You can check out Masterworks if you’re interested
- Vintage cars. If you love getting down and dirty, you can purchase a vintage car, restore it and sell it for a higher price. This, although an expensive collection, is a very popular one.
These are just a few of the items people collect. Others include cutlery, unique household items, clothes, jewellery and many more, valuable assets which will produce wealth at the right time.
6. Certificate of Deposit
A certificate of deposit is a certificate that a bank issues to someone who makes a deposit of money to the bank for an agreed period of time at a determined rate of interest.
This is a good way of making your asset appreciate in value especially if this is money you don't need to use for some time. Instead of the cash sitting in an account with no interest, it is better off earning you money in a cash deposit account.
This is a low-risk investment and, in most cases, does not attract a very high-interest rate. The certificate of deposit is purchased through the bank of your choice.
To ensure that your money is protected, make sure that the bank has an insurance cover on the deposits so that if the bank was ever to go under your money will be protected.
When you deposit the money, the bank will pay you interest as agreed. When the term of the deposit is over, you’ll get your initial cash deposited with any accrued interest.
This asset helps you to make money, and depending on the amount of cash invested and the period of time, you can determine how much wealth you want to create.
It is good to note that like almost everything else, cash deposits interest rate is affected by the fluctuations in rates of inflation. In seasons where the rates are very high, the certificate of deposit might become less attractive.
7. Mutual Funds
A mutual fund is basically an investment vehicle where different investors pool their money together under a fund manager who invests on their behalf.
It can also be defined as a group of assets managed together, and the proceeds are shared proportionately. The main assets invested are treasury bonds, treasury bills, stocks and other assets that appreciate in value.
Due to their diversification, mutual funds are very attractive as an asset and are an excellent choice to increase your money and net worth. One of the advantages is that they can be easily purchased through many brokerage firms. This asset also attracts some tax benefits depending on the investment vehicles used, making it a better option for most investors.
One thing to note is that, the investors are not consulted on where and how to invest as they do not have any ownership rights of the holdings where their funds are invested. If this does not bother you, mutual funds just might be the thing for you.
8. Private Equity
Capital investment made to corporations that are privately owned is a private equity. As compared to public equities, private equity is attractive to investors as they offer better returns. In private equity, you are able to invest and get an ownership stake in a private business operation.
This can be an already existing business or a startup. This means that the investor will get a portion of the profits and receive a lump sum if the business is at some point sold.
This equity requires a fairly huge investment, and the investors must be accredited or be a venture capitalists. Investing in a business you have not started is risky, and a great deal of homework is called for in this instance.
However, if you manage to invest and pick on the right private equity, the returns can be very rewarding, and this can propel you into financial success.
In conclusion, we all have equal opportunities out there. Let’s stay encouraged to go out and invest in assets that will clearly make our lives better and give us financial freedom. Have a great day and I’ll see you in the next one.