It is a well-established fact that raising a child is expensive, so it makes sense that most parents tend to focus their financial thoughts on the here-and-now when they first choose to have children. However, over time, many parents begin to think about their future finances too, with concerns over the need to fund college courses and property down payments in future slowly becoming all the more pressing.
If you have previously been focusing on present-day financial matters, turning your thoughts to the future can initially seem overwhelming, especially given the massive variety of available investment opportunities. In an effort to provide a little clarity, below, we have detailed the types of investments that you may wish to consider…
Peer-to-peer lending is a relatively new innovation, but one that has enjoyed increasing popularity over recent years. The idea is simple: you, via an intermediary, lend money to another person; hence “peer”. The person you lend to will then pay back that loan, along with interest; the rate of which is usually higher than that offered by standard savings accounts. The idea is that everyone benefits: applicants can access the funds they require far more quickly than they can through conventional lending methods, and you – as a lender – receive a good return on your investment.
When all goes smoothly, peer-to-peer lending works exactly as described, and both you and the person you loan to can enjoy the benefits of this innovative practice. However, the downside is that the process doesn’t always go smoothly, which can mean that your funds are never returned – the platforms that facilitate peer-to-peer lending do not usually take responsibility if your funds are not repaid, nor are there any government protections in place. Due to this risk, it’s usually best to only turn to this form of lending for relatively small amounts, to thoroughly research peer-to-peer companies and only opt to use platforms that do all they can to ensure their applicants are able to repay.
When people hear the word “investment”, nine times out of ten they will immediately imagine the stock market – and then immediately cringe. Most of us know that the stock market is inherently volatile, and there’s every chance that you might lose a significant amount of money, so why would we even suggest it?
Quite simply, because it works, and the returns can be far higher than you would see with a conventional savings account. While the stock market can crash, and substantial sums can be lost, there are ways and means of preventing your entire savings going up in smoke – primarily through diversification.
However, it’s important to note that investing in stocks is every bit as tricky as you have heard, so you will likely need the assistance of an experienced expert in order to protect your investment and see good returns. While it is possible to take a DIY route, this adds extra volatility and risk to an already-risky proposition, so it’s best to play it safe and seek the advice of the experts.
Overseas real estate investment
Overseas real estate investment enjoys similar benefits to domestic property investments, such as good rates of return and a relatively low risk profile, but a few added bonuses. For one thing, local property tends to be expensive; in contrast, overseas properties can be far more reasonable, which helps to ensure you get the most bang for your buck, so to speak. Secondly, any property you buy overseas can also function as a vacation home for your family for a few weeks each year, which could save you a small fortune on holiday costs. Last but not least, when you’re not staying, you can let the property to other travelers – a choice that can often be far easier to manage, and cause less stress, than earning an income from long-term tenants.
Most first-time overseas investors will find the process simpler if they choose an English-speaking country; so Australia, New Zealand, and Canada are worth considering, with the opportunities available in Singapore via a resale HDB portal also potentially lucrative. It’s worth noting that the UK would once have been on the list of countries you could potentially invest in, but unfortunately, the uncertainty of Brexit makes it less favorable, so it’s best to focus on the English-speaking countries who are enjoying more settled times.
Passive income investments
In their simplest form, investing involves using a sum of money in order to achieve a financial return. As a result, investing does not necessarily mean putting money into something separate and external; it can mean investing in your own small business. The result of doing so will largely be the same: you pay a certain amount of money and receive profits in return.
If you’re not looking to actively start a business, then investing in the establishment of a passive income stream is likely to be the best choice. The idea of a passive income is relatively straightforward: an income that you receive with little to no regular effort. While you may have to create the source of the income, when it’s set up and in place you should be able to look forward to a continual rate of returns – which makes investing in establishing a passive income form an unusual, but viable, type of investment.
There are a number of different types of passive income to choose from, with affiliate marketing perhaps the most common choice. You’ll then need to spend some time getting your chosen passive income stream up and running, which can be time-consuming, but most investments require some form of time dedication either in terms of research or searching for the right opportunity. After this initial setup period, however, you should be able to look forward to a continual income with minimal extra effort required on your part. An unconventional form of investment, but one that could well work for you.
Money market accounts
Money market accounts have enjoyed continued popularity and, upon inspection, it’s easy to see why. This type of account tends to earn higher interest than a standard savings account, are easy to access, and most accounts are FDIC-insured.
The one issue with money market accounts is that you’ll usually need a decent amount of money to invest if you wish to use one. You’ll also be somewhat limited in terms of the number of withdrawals you’re allowed to make, with up to six per month permitted – more than enough for most people, but still worth noting.
While you wouldn’t want a money market account to be your only form of investment, the fact that funds are relatively easy to access is undeniably beneficial if you’re just getting started with investments.
Investing in gold is one of the oldest forms of investment in the world, but its continued popularity is a testament to how reliable it is believed to be.
The process of investing in gold is incredibly simple; you buy gold, keep it, and then sell it as you see fit – most commonly as a result of a market rise. People tend to be drawn to gold investments because they are tangible rather than just numbers on a screen, and because the market is relatively stable.
Of course, nothing is guaranteed, and there may well be a future in which gold is no longer in demand, and thus you’re left with a lump of metal. However, such a scenario seems unlikely, and if you buy gold at a good price, then there is a strong chance you’ll be able to generate a good return on your investment.
It’s important to note that the investment ideas listed above can work in concert with one another. There’s no need to choose just one approach; in fact, it’s actually preferable to spread your investments across a few different channels in the name of diversification. It’s therefore best to pick a couple of ideas from the options above to explore further, which should then allow you to embrace a secure financial future for you and your family.