Having enough money to live comfortably, even luxuriously, without needing to worry about money is everyone’s dream. But the reality is that simply earning a large salary barely covers your living expenses and certainly will not make you wealthy. If you have excess cash, you should save a good portion of it in a secure way and allocate the rest towards investment. If you wish to set yourself on the road to long-term financial stability and become wealthy, you must invest your excess cash wisely and profit off your investments.
With the rapid advancement of financial technology, investors have been granted very easy access to investment mechanisms that previously had numerous barriers of entry and gatekeepers. Therefore, when looking for investment options for your money, you will come across numerous possibilities, each with their own set of pros and cons.
Everywhere you look, you’ll see yet another financial blog (much like this one) urging you to not only invest your money but invest your money wisely! Today, there is so much information about investment freely available on the internet that you become simply inundated with it and might end up not knowing where to even start from.
If you find yourself asking “where should I invest my money?”, allow us to simplify it for you.
Few investment options for your excess cash.
Fixed Deposits
Fixed deposit accounts are not exactly an investment but more of a savings method with higher interest rates. You open a fixed deposit account with a large sum of money for a fixed term, either with a fixed interest or floating interest which you will receive on a monthly basis or on maturity. Generally considered one of the safest ways of storing your money, fixed deposits are only risky if the financial institution where you stored your money goes bankrupt. Even so, most banks and financial institutions are covered by government bodies which means that even if your selected finance partner goes under, your money will still be secured. The drawbacks of putting your money in fixed deposits is that you will not be able to do any transactions with this money and if you need to dissolve a fixed deposit prior to the date of maturity, you may lose all your interest up until that point.
Mutual Funds
A mutual fund is created when a fund manager pools together money from various individuals and invests them across a number of securities. Investing your money in mutual funds is recommended for first-time investors, as it is professionally-managed and your money is spread across various investments which means it’s less riskier (and also with relatively less charges involved). It’s considered an ideal way to dip your toes into the next level of investing as you can learn about the behaviour of which industries and companies through the careful actions of your fund manager, without risking all your money in the process. There are many companies offering mutual funds such as
- NDB Wealth - https://ndbwealth.com/institution/mutual-funds/bond-market-fund
- Genie - https://www.genie.lk/products/mutual-funds/
- FirstCapital - https://firstcapital.lk/services/unit-trusts/
Bonds
Bonds are also a great investment mechanism. The money that you invest in bonds will be used as cash and capital to fund other businesses (including the government) and you will generally be receiving a fixed interest after a set time period. While not entirely risk-free, it is more secure than a lot of other investment methods.
Stocks
One of the most volatile investment streams, the stock market is when you buy shares of a public limited company and reap the benefits either through dividends or by re-selling your shares at a higher price than you bought them at. Day-trading is short-term buying and selling which is a very risky way of putting your money in the stock market. You can also be in it for the long haul which is more sustainable investment. If you have excess cash, dabbling in the stock market is a great way to earn high returns on investment. Start small until you have figured out the ropes.
Real Estate
One of the most lucrative investment methods, real estate requires a large capital to begin with but is one of the most long-term forms of passive income. You can either buy property and develop it (agriculture etc.) or rent it out (homes, offices etc.).
Find out here more about the booming real estate market http://www.ft.lk/front-page/Sri-Lanka-s-real-estate-market-transitioning-from-buyers-market-to-sellers-market/44-714911
While investment is a must nowadays, you are free to choose the investment method most suited to your disposition and according to your requirement. Whether you want a large sum of cash on retirement, or you’d rather receive a steady supplementary income for the rest of your life, there will be a suitable corresponding investment technique. It depends on the level of risk you are willing to take with your money, as well as your expected returns on investment. Generally, the higher the risk, the higher the payout.
Regardless, whichever investment techniques seem attractive to you, it’s very important that you do not invest all your money in just one. Diversified investment ensures that you take on less risk; in the event that one investment tanks, your others will still be safe. Through a series of smart and varied investments with your excess cash, you will be well on your way towards long-term financial wealth.
However, if in-case you need to obtain a quick cash loan, you can always turn to OnCredit.lk who will always be there to help you with a personal loan.
