Understanding Investments: What Kinds Are Suitable For Me?

No matter what stage of life you are in, it is always wise to plan for the future. In a world where the unexpected can happen at any time, preparation always comes in handy. 

Your financial plan is one of the most important things to prepare for your future and investing is a key part of this. Building a smart, diversified investment strategy could be the key to growing your money.

But with so many investment choices out there, it may be hard for you to make the right decisions for your personal situation. 

Before putting your money on the first investment opportunity you see, you should first be familiar with how they work. Here are some of the most common investments you can consider and what active management is involved in each.

4 Popular Types of Investments to Consider

1. Savings Account: Stable Low-Yield Investment

It’s easy to set up a savings account in a trusted bank. You will be assisted every step of the way, and the requirements are simple and straightforward.

The good thing about savings accounts is that they keep your money safe and secure without removing your control. And as the years go by, you earn interest. Plus, there is little to no risk which can be comforting.

The not-so-great thing about savings accounts is that the percentage of interest you will earn tends to be far lower than any other investment. It would take substantial savings to make livable amounts of money – or it would take a very long time to grow your money from solely a savings account. 

2. Real Estate: Passive Income Investment

Real estate can be a common investment for people, especially those approaching retirement age. As another form of passive income, investing in real estate is often fairly hands-free. 

This is a great way to allow your money to grow as you collect rent. Also, properties tend to increase in value over the years meaning you will be able to benefit from capital growth in the long run.

The trouble, however, is the initial capital you will need. Properties don’t come cheap, whether you’re buying them or building them from scratch. 

Sometimes, it will take time before you break even, but it is a long-term investment decision that rarely goes out of demand. Even if you do not have tenants continuously, the nature of the market may still increase the value of your home and therefore, your investment.

3. Stocks and Bonds: High-Risk Investment

When you think of investments, this is probably where your mind goes first. Purchasing stocks or bonds is like owning a part of a company that you buy and sell ownership of at the (hopefully!) right times. 

Always remember the general rule: the higher your risk, the higher your possible yield. 

Some people do this passively, while others make a whole living out of it. Either way, you need to be very careful and knowledgeable about the practice for this investment strategy to work in your favour and should seek professional advice.

4. Life Insurance: Medium-Risk Investment

Life insurance is a passive investment that can help you when times are uncertain. If something ever happens to you, you’d be able to leave behind a significant sum of money to your loved ones. 

Before taking on any life insurance policy, read up on their policies to make sure that the plan is something you agree with. Taking up life insurance through an experienced financial adviser can help you understand the difference between policies. A certified financial planner can also help you make an informed decision between insurance policies to ensure your future – and the future of your family – is secure. 

Investing is always an option when it comes to planning for the future, so long as you have the financial capacity. No matter your age, there are plenty of investment options to try. As long as you do your research and get help from financial experts and advisers, you stand to benefit from a robust, diversified investment portfolio.

To know more about tips in managing your finances during your retirement years, check out these posts:

• Securing Your Future: 3 Retirement Myths You Should Ignore
• Retirement Planning in Australia: How much do I need?
• Retirement – How to avoid the five of the biggest mistakes and retire on your terms

Are you in need of some professional financial advice to invest in your future?  Newcastle Financial Planning Group has a team of financial advisers and experts that can help you figure out a suitable, tailored investment strategy. We help everyone from young couples to retired professionals reach their financial goals and aspirations. Contact us today and schedule in your initial appointment with one of our experienced financial planners. 

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.