Currently, 56% of all Americans own stock, but it was more common in the years 2001-08, when as many as 68% of Americans owned at least one share. Stock ownership is determined by household income, formal education, and age, but it’s not the only type of investment to select; there are multiple trading avenues and supporting platforms that make it easy to invest money in different ways.
With that in mind, let’s look at some of the ways you can invest your money in 2022, including into the stock market.
Stock Market
Despite there being other ways to invest money, the stock market is still one of the most popular investments for businesses and individuals alike. What was once a market exclusive for companies and investment tycoons is easily accessible thanks to the variety of online trading platforms available.
There are three ways to invest in stock – on your own, by using investment brokers, or investing in your employer’s 401(k). Investing in a 401(k) is the most common way for amateur investors to dip their toes into the market. Nerd Wallet says it’s the best way to teach new investors proven investing methods. By making small contributions regularly, it focuses on long-term investing rather than, for example, day trading, which has proven risks.
Opting to use a broker is the safest option, but many people attempt stock investment by themselves. Considering the market can be hard to understand, experts recommend starting your investment using a robo-advisor for a helping hand. A robo-advisor provides the benefit of stock investing without the need for legwork from the individual. They’re operated by companies that will ask you about your investment needs and future goals in the onboarding process to help you build your investment portfolio.
Most robo-investors will ask for 0.25% of your account balance in return for their help and advice.
Hedge Funds
Hedge funds are not for the faint-hearted. They’re one of the more complex investments. The definition of a hedge fund can be hard to understand – but in short, it’s a private investment partnership and funds pool that uses complex strategies to invest and trade complex products.
Because they’re so complex, the US securities and exchange commission has put regulations in place on who can invest in them. For an individual to invest in hedge funds, they must be an institutional investor or an accredited one. Accredited investors will have a net worth of over $1 million. The other option is for individuals to have an income over $200,000.
The United States Census Bureau says that only 4% of US households have an income over $200,000, so it’s not exactly the investment option for the average Joe. But those that try it can use alternative data for hedge funds to determine track market trends and overall interest in a particular stock. Big data sets and analytical software are essential to modern-day hedge fund investments.
Cryptocurrency
Cryptocurrency is the most exciting investment opportunity in 2022 – and it appeals to everyone. The appeal stems from the fact you don’t need a substantial initial investment – the volatility of the crypto market does the work. But, that also transpires into the prominent risk associated with crypto investment – the market is so volatile that it is easy to lose money.
Still, hundreds of thousands of investors are realizing the potential of crypto – especially now that multiple big brands like Tesla and Lush accept crypto as a payment method for products. And, when you look at the influence Elon Musk has over the market, you could argue that all you need to do is follow his tweets to find the correct crypto to invest in.
To start investing, it’s worth checking out a platform like Coinbase that puts everything you need in one place. Coinbase is a platform to buy, sell, transfer, and store cryptocurrency. Platforms like these are why it’s so easy for the average Joe to start investing. All you’d then need to do is have an investment strategy. Most people opt to trade crypto, but you can also stake it to authorize transactions in replacement for more crypto.
There are plenty of articles and content online that talk about the most popular coins and trading strategies. (Hint: one of the best tactics is to buy and wait.)
Property
Property is an OG investment method and a very effective one. The only setback is the need for a substantial initial investment. But, there are ways around it. Many Americans find themselves immersed in property investment by buying out a landlord at the end of a long-term rental agreement.
Sometimes, a landlord will ask a tenant to move out because they want to sell, and the tenant decides to become the buyer. That tenant could then themselves become the landlord, and so a long-term investment opportunity comes to fruition.
Investing in a property to rent out by acquiring a home loan or mortgage first is the easiest way for the average Joe to get into it. Property development is another avenue, but then we’re talking hundreds of thousands of dollars and market knowledge to do so.
The Bottom Line
Investments are exciting. They’re a chance to capitalize on the money you have rather than letting it sit in a bank account. Anyone with savings should consider the benefits of investment – but there has to be an awareness of the risks involved. After all, an investment won’t always be successful, but there are ways of mitigating the risk, such as by using an investment broker.
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Not bonds. They’re at the end of a 40 year bubble. Not real estate. Big bubble there too. Commodities and precious metals are the only assets left that are undervalued today.
Agreed, Robert.