Risks That Can Be Involved With Different Types of Investing

Tommy Wyher  |

Far too many people allow their money to sit in a checking account without earning any interest. Savings accounts are not much better as they only have interest rates of a fraction of a percent. What many wealthy people do is make their money work for them allowing them to be making passive income constantly. This will take wise investments over the course of time but with the right amount of research anyone can invest in a profitable fashion. There are risks associated with investing money as without risk there is rarely a reward. Different investments come with different risks that need to be mitigated if possible. The following are different types of investments as well as the risks that you will be facing.

Stock Market

The stock market is what many people think about when they are considering investing for the first time. The rewards can be immense with a few investments changing the quality of a person’s life with the right investments. The best thing that an investor can do is to invest in an industry that they have a reasonable amount of knowledge in. A person who works in social media investing in Facebook when it first went public would have seen their investment go from the opening price of $30 to over $200 at the stock’s highest point. Stock brokers might have tips but they are paid to buy and sell your stocks. They make money regardless if you lose or make money so take this advice carefully.

Income Property

Income properties are becoming more and more popular as it can be a way to earn truly passive income. A property management company will handle nearly everything for you when you hire them to manage your income property. They know the best practices and have done rental history checks for years so they know what tenants might bring trouble. In this article by Housing Gurus they lay out a plan to be proactive about preventing new tenant damage. This includes a walk through as well as taking pictures of the property on move in day. Income properties can come in other forms like that of a hunting ground. You can charge people to hunt on your property if there are a decent number of deer or boar on the property.

Startup Investment

Investing in a startup can be risky but very rewarding financially as well as personally if you build a relationship with staff at the company. This does not mean to throw your money at just any startup so it is important to do your due diligence. Asking for a business plan as well as current earning is imperative. Do not use projections that the company gives to you as they are often quite optimistic rather than realistic. The startup should be in a niche that you know and understand as a fast talking founder can lead you to losing your money. Lastly, you need to ask how the money will be used and they should have a plan for it. Otherwise the money could be mismanaged and your investment lost.

Depreciating Assets

Purchasing a car is not an investment as the car loses value as soon as it leaves the dealership’s parking lot. Unless you are going to fix up the car and sell it for a profit it is wise to avoid these types of investments. Boats or jet skis are similar as well as maintenance on these watercrafts are incredibly expensive. Look only into purchases that are going to make you money rather than have you regretting your decision in a few months. Mutual funds might not be the most profitable investment but they will make you money without much of the risk that is associated with certain stocks. Put your money to work for you rather than buying something that you will have to continually put money into.

Investing comes with certain risks but it is far easier to make money through investing than most people realize. Allow your money to work for you rather than sitting in an account without earning any interest. Start researching today to see what investment fits your financial goals!

DISCLOSURE: All of the opinions in this article are of my own and do not reflect the opinions of Equities.com

The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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