Investing is one of the smartest ways to build financial security and reach your goals. These days, you could be just one decision away from making a life-changing investment. But not all options are created equal. Some are riskier than others, so it’s important to tread carefully.
Instead of letting your money remain idle in a savings account, there are plenty of opportunities out there to help your cash grow. Whether you’re just starting out or looking to level up, the right investment could turn your financial situation around.
Money Market Funds
If you’re looking for a simple and low-risk way to grow your money, money market funds (MMFs) are a solid choice. These funds pool your cash with other investors’ money and put it into safe, short-term investments like corporate debts and Treasury Bills.
In simple terms, you hand over your cash, get units of the fund in return, and watch your money work for you. The usual returns fall between 6% and 10%, which isn’t bad for something this steady. Plus, since these investments are short-term, you can pull out your money pretty easily whenever you need it.
Stocks
Investing in stocks involves buying shares in a company in the hopes the company performs well in the stock exchange market, which could potentially make your payment more valuable.
Companies usually issue stocks to raise capital, with prices fluctuating based on factors like economic conditions, market demand and company performance. You can trade stocks on exchanges such as NYSE or NASDAQ where buyers and sellers interact freely.
As an investor, you may choose between individual stocks and diversified portfolios. You may opt for either long-term strategies where you could hold stocks for years at a time or diversified portfolios like mutual funds and ETFs.
If you’re an investor in Canada, a good starting point is the Toronto Stock Exchange (TSX). Canada has a vibrant stock exchange market with most investments focusing on energy, finance and tech. These are well established companies that have proven time and again they are dependable.
But, if you are looking for new entrants that can give you that lucky leap in your investments, you can try emerging sectors. Gaming is one of them, and video game companies are registering high revenues.
Close to it is iGaming, an industry focusing on casino games among other games. Many Canadians enjoy casino games which has led to an upward trend in the revenue collected by the sector. More online casinos in Canada are popping up offering a safe gaming experience to meet the high demand. And provinces are also coming up with regulations to support the industry. So, if you are looking for an underdog stock that can pull a surprise, iGaming isn’t a bad consideration.
Certificate of Deposit (CD Ladder)
CD ladders are an excellent avenue to grow your cash if you’re looking to access your money at regular intervals. Instead of pooling all your money in one CD with a long-term lock-in, you can instead divide it into multiple CDs with different maturation dates.
Here’s an example to break it down for you. Let’s say you have $5,000, you could invest $1,000 each into 1-year, 2-year, 3-year, 4-year, and 5-year CDs. As soon as the 1-year CD matures, you reinvest it into a new 5-year CD.
The next year, the 2-year CD matures, and you do the same. In the end, all your CDs will earn a higher interest rate, but one will mature each year giving you a window to withdraw in case of a rainy day.
Corporate Bonds
A corporate bond is a loan you give to companies in exchange for regular interest returns along with the principal, as soon as the bond matures. When a company wishes to expand or set up a massive project, they usually issue bonds.
You buy the bond, and in return the company pays you interest, usually every six months or annually. These bonds are usually more recommended than stocks because bondholders get paid earlier than stockholders in case of a company crash.
In retrospect, they are riskier than government stocks, since companies may default. Therefore, before jumping in, make sure you do your homework and only trust well-established companies like Amplify Samsung SOFR ETF or Vanguard Ultra-Short Bond ETF.
Real Estate Investment Trusts (REITs)
REITs are companies that focus on owning, running, managing, or financing properties that generate income. When you invest in a REIT, it’s similar to buying shares in a company, but instead of earning from manufacturing or services, the company profits from mortgages, rents, and property sales.
The reason why this option is so lucrative is because you’ll get to share the profits of the real estate property without having to buy, manage, or maintain it yourself. Plus, REITs are legally required to give back 90% of their taxable income as dividends, making them a favorite for many investors.
Of course, not all REITs are the same. Some, like ANGC Investment Corp., offer a hefty 15.5% yield, while others, such as Morguard North American Residential, provide a modest 4.57% return.
Take That Leap of Faith
Finding a place to invest your money doesn’t have to be complicated. There are some solid low-risk options up there, along with medium risk avenues. No matter which path you take, the perfect moment to start is always today. The sooner you dive in, the better.
