Stocks, Shares, Real Estate, or Crypto: How to Choose the Right Type of Investment for You

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Investing can be pretty overwhelming, especially for beginners. Understanding different asset classes, the risks, and the principles of investment is key for a successful investment strategy. There are dozens of assets available for investment, each with its own unique risks and varying returns.

The one-size-fits-all approach does not work here. Something that giving your friend top returns may not do the same for you. That’s how unpredictable the investment landscape is. For instance, the returns from the beachfront property in California that you bought in the 1970s and sold 20 years later couldn’t beat stock returns of the same era. Likewise, no investment can beat the returns you generated from your investment in Apple or Walmart shares in the early stages.

The question is, how can one choose the best type of investment? Is it enough just to invest in XM stocks or should I consider other options? Here’s an overview of the most popular asset classes that can produce good returns in the long run. Remember that this is intended as general information only, rather than specific investment advice. Be sure to consult a professional about your own situation before making any investment decisions.

Stocks and Shares

Buying a company’s shares will make you a part owner of the company. Your level of ownership depends on the number of shares you bought. Equally, the income you’ll get from stocks depends on how the company performs in the market.

An increase in the stock price means higher profit for all shareholders. Investors also earn returns in the form of dividends. In addition to the returns, each shareholder has a claim on the business’ assets. Investors also get voting rights at shareholders’ meetings. Your rights as a shareholder can vary depending on which company you invest in and how many shares you own.

The earnings you can expect from stock investment depend totally on the company’s ability to make profits in the future. While it’s good to be optimistic about a company’s success, you should invest carefully. Do some research into market trends, the company’s track record, and their latest news reports before investing.

Real Estate Investment

Real estate has become a popular investment option over the last few decades. Property investment goes beyond the house you live in. Selling your home is one thing, but investing in multiple properties to diversify your investment portfolio is another. There are plenty of options for real estate investment, but having rental properties and flipping houses are the most popular.

Rental Property

Becoming a landlord comes with many perks for the investor. You make a decent passive income by renting your property to a tenant. The biggest advantage of rental property is that it virtually guarantees you a stable income every month. The amount of rent you earn from your rental will depend on the property, its condition, and where it’s located.

A spacious building located in a peaceful neighborhood and offering good amenities, like car parking and a strong internet connection, can generate a tidy rental income. Another way to earn returns from a rental property is by selling it a few years later when the value of the property appreciates. However, as a landlord, keep in mind that you have to take care of property maintenance, tax, insurance, and repairs.

Flipping Houses

Flipping is when investors buy a property with the intention of selling it in a few months, usually within three of four months of purchase. The idea is to make improvements to the property, whether repairs, renovations, or both, to raise its value in the market and sell it for a profit. If you have enough capital, you can invest in multiple properties at once and sell them after completing the repair.

While flipping houses can get you the best returns, this form of investment carries significant risk. You may struggle to sell the property for the price you’re looking for, or at all. The value of the property might also depreciate due to a variety of factors. It’s important to understand the state of the market, research the neighborhood, and check the property’s proximity to infrastructure such as public transport, schools, and hospitals before investing.

Crypto Investment

Despite its high volatility, the demand for cryptocurrency has skyrocketed in recent times. However, many people are still unsure about this digital investment, especially as values climb. The days when you could buy one Bitcoin for less than USD1000 are long gone.

While it can still be a good form of investment, it’s important to be careful about how much of your investment portfolio you devote to cryptocurrency. Consider the risks and only invest what you can afford to lose. It’s also important to remember that your income from crypto-investment is taxable. Contact a professional chartered accountant to help you manage crypto-related tax issues.

So, Which Investment is the Best?

Each type of investment carries its own set of risks. Some markets are more volatile than others, but all types of investments will expose you to risk. Seek the advice of a professional and do your research before making any firm decisions.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.