How Investing In Various Asset Types Will Change Your Life

If you haven't invested any of your hard-earned cash yet, it's never too late to start. There are many assets to invest in, each with their own characteristics and payoffs. However, figuring out where to start can be a bit overwhelming. I will explain what it's like to invest in various asset types and tell how they will change your life forever.

The stock market

Perhaps the most obvious place to start is with the stock market. Trading platforms like Robinhood, Interactive Brokers and E*Trade have made it so easy that you no longer even need to have a financial advisor or broker to complete your transactions for you. Executing trades takes only a couple of minutes, although you should research every stock you consider before buying.

It's never been so easy to invest in the stock market as it is now, but that also means it's easier than ever to lose money on trades. Investing in stocks can be extremely rewarding if you take the time to understand what you're investing in. When you buy shares in a company, you're purchasing a piece of that company, and you receive the right to vote on what happens to it.

Despite the challenges the world has been facing, the stock market has been soaring. The prevailing view among many investors is that the only direction stocks can go is up. That isn't actually the case, so it's important to keep that in mind when you're investing. You should never invest money you can't afford to lose.

When you buy and hold stocks for an extended period, you can watch your money multiply over time. Stock returns are much higher than what you would earn by putting the money in a savings account. You may also be able to benefit from short-term price movements, but a long-term mindset is usually best. The key is to buy companies that will thrive for years to come.

ETFs and mutual funds

Exchange-traded funds (ETFs) and mutual funds share some similarities, but they are also quite different. ETFs are traded on exchanges like stocks, and they can change hands throughout the day. However, mutual funds are only traded once per day after the market closes, and those trades are made directly from investor to fund instead of on the secondary market like ETFs.

ETFs and mutual funds both offer the benefit of exposure to a portfolio of stocks. Most ETFs track major indices like the S&P 500, which means you get a slice of stocks weighted according to the index. Most mutual funds are actively managed, which means a manager or team of analysts are picking stocks for the fund.

Like stocks, ETFs and mutual funds are most beneficial when bought and held for a long time. It's easy to see how much value you're gaining with ETFs because their returns match whatever index they are tracking. ETFs and mutual funds are life-changing because they provide access to a collection of stocks that you don't have to manage yourself.

Cryptocurrencies

Cryptocurrencies have gained in popularity and earned a place in some institutional investors' portfolios. Bitcoin is the oldest and most popular cryptocurrency. You can buy it in a few different ways, depending on how involved you want to get in the process.

The simplest way to own bitcoin is to buy it directly through an exchange like Coinbase or Binance, and you will also need a digital wallet to hold it. The question you have to ask yourself now is whether bitcoin will keep increasing in price in the near term or whether it remains range-bound for now. On the other hand, the cryptocurrency could be an excellent long-term investment.

It's essential to consider bitcoin's volatility when investing in it, especially if you're approaching it with a short-term mindset. If you can get into the cryptocurrency before the next significant upward move and then sell it before the price falls again, you could earn a life-changing amount of money in a short time.

Foreign exchange

Finally, some investors prefer the foreign exchange, or forex, market. Forex is a bit more complicated than the other options on this list, but it can be just as rewarding. You'll need US forex brokers to help you complete trades of currency pairs. For example, you might believe that the value of the US dollar will fall against the British pound, so trading the pair enables you to place a bet on this expectation. You may find a couple of well-known Forex brokers that allow you to trade with crypto as well, even if you are in the US.

The forex market is extremely volatile, which means that prices change quickly. Thus, if you're looking at investing with a short-term mindset, you might seriously consider trading currencies. If you do your research and trade wisely, you could end up with some serious cash in a very short time.

Wherever you decide to invest, you're sure to change your life, whether that means being able to retire comfortably or affording a big-ticket purchase you've been wanting.