Four Types Of Investments To Increase Your Net Worth
These are the four types of investments that are available to profit from. Most finance people only focus on the first one. You can start small, then only invest in one or all four.
Paper assets receive the most attention from the media and writers of investment newsletters, while the other three often get less publicity. You can use these four types of investments to increase your net worth over your lifetime.
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Paper Assets
First are paper assets. Paper assets are what most people will first be introduced to when they are starting to learn about personal finance. This is because investing in the stock market is popular in the financial space. It is also one of the easier ones to gain access to since you need to open the correct accounts.
Paper assets receive the most attention. Paper assets are merely another way to get more out of your currency. Common ways to do this include high-interest savings accounts, money market accounts, and the stock market. The stock market is the one that people often hear the most about for building wealth.
You are merely trading your paper currency for another form of your paper currency. With this strategy, you want to trade your ever-devaluing currency by finding higher interest rates or yields. Your currency is only paper backed by confidence… which means it’s backed by nothing. More specifically, nothing is government empty promises.
You can put your money in a high-interest savings account, giving you about 4.5% interest. You could also find money market accounts that pay between 2.5% to 4.88%. The rates will vary from bank to bank. The more interest you can make from your money sitting in a high-yielding account, means less money you will lose to inflation.
You could also choose to invest in the stock market. The stock market is often presented as a way to get rich. The stock market's purpose is a tool to preserve your wealth.
You could invest in growth stocks. You could choose to invest in small-cap, mid-cap, or large-cap stocks. You could invest in value stocks. You could invest in mutual funds. You could invest in ETFs. Since there are many ways to invest in the stock market, it is critical to have a strategy. It is also vital to understand how the stock market works.
Can you benefit from the stock market if you choose the right stock? Sure. Is it worth the gamble? No. Is there any way of knowing what the next stock will be? No.
Understand the purpose of the stock market. Enter the stock market when you are ready. Do not enter it planning to get rich. You should treat it properly like a tool, not like a casino.
There is often too much focus on the stock market. Yes, it is indeed a way to build wealth. The problem is that it usually only makes sense if you have the money to invest in the stock market. Only choose to invest in the stock market with money you are comfortable with potentially losing or taking a long time to make back. You need to know what you are doing to avoid potentially losing money. That is why it is vital that you only get into the stock market once you have made money from one of the other three ways below.
There are three other types of investments to increase your net worth. You exchange your paper currency for tangible assets with these investments.
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