Holidays are over and still you have more than a thousand dollars in your possession.  Trying to figure out what to buy or where to spend that money?  Why not keep it, or better still make hundreds of dollars more, through investment!

Investment is placing a sum of money, almost forgetting it for quite sometimes, and letting it grow by itself.  Better still is to put a seed amount today and adding few more dollars monthly and let it grow substantially over the years.

The possible investment vehicles, with rates of return and risks involved, are the following:

 

1. Savings Account

There is no substitute to the long-time trusted savings account in any bank locally.  It’s safe because you let them keep your money and still has the privilege of taking it from them anytime a need arises.  Since it is so volatile, the rate is very minimal, around 1 to 3% per annum, with $25 minimum deposit.

 

2. Time Deposit

This is a variation of the savings account in the sense that it cannot be withdrawn anytime but on a specific period of time, say 3 months.  Rate is just a little over the savings account, up to 15 % per annum for a maximum period of 5 years.

 

3. Municipal Bonds

This is a government issued securities with a specific rate of return that varies, but higher than the inflation rate.  No risk because it is the government who owed you money.  The government just has to print money to pay you on a due date.

 

4. Mutual Funds

Another vehicle that pools the investments of other people and invest it in other investments like the stock market.  This has a higher rate of return at around 8 to 10% per annum, a little risky because there is no guarantee of being paid.  But by historical standard, there are very minimal cases of bankruptcy among investors.

 

5. Stock Market

A vehicle that was dominated by elites before but now has been penetrated by some medium scale investors during the advent of online transactions.  This is basically an exchange of property values called stocks.  Every transaction day has its own list of gainers and losers but long time investors prove the stock market is worth the wait when the investment is left for a longer period, say more than 5 years.

Rate of return is about 9 to 10% per annum and there is also no guarantee.  Long-term investment averaging can offset some months of being a loser.

 

6. Real Estate

Referred to as an appreciating property because its value increases over time. By the law of supply and demand, the commodity remains scarce but those who want to own it are increasing.  Rate of return can go up as high as 50% and very minimal risk.

 

7.  Own a business

This is the most lucrative investment because it is you, the owner, who dictates how much rate of return you can handle.  Big start-up capital for big business and also big risk of not getting it back soon.

 

8. Do it all

As most investment advisor say: “Never put your eggs in one basket.”  This means diversify the investment.  If you have a big capital, allot a certain percentage for each investment vehicle and observe what gives the best profit and continuously adjust the percentage as you learn the process and trend in investing.

Wait, only a little over a thousand dollars cannot do all those, right?  Here’s an advice for beginning investors like you.  Start with time deposit, and then add a few hundred dollars every month to your savings account.

After 6 months, withdraw your savings account and add it to your time deposit for another 6 months.  Continue the monthly deposit in your savings account.  After a year, your time deposit may qualify for a mutual fund.  Invest in mutual funds, replace your time deposit from the savings deposit and continue the process for another 6 months.

After 6 months, try the stock market, and then try municipal bonds.  As you continuously accumulate more value for your money, try the real estate and eventually set-up a business.

Although it seems to be a long process, it all started with a decision to invest, and investment may become addictive especially when you are still young to accumulate more money for your early retirement.

Happy investing!