How to choose the best type of Investment
It's never too soon or too late to begin investing your money for the future.
You can be a beginner or be well seasoned in investments to profit greatly and grow your money. Some inversions are tried and true over decades and some are cutting edge with new technologies. The type of investment you’ll want to choose depends on several factors including your personality, the amount you want to invest and how long you plan to invest it.
From stocks and bonds to cryptocurrencies and real estate, there are the benefits of each that we’ve laid out for you in this article.
At the end of the day, the type of investment you plan to make should feel right for you. Read on to decide the best path for your wealth.
Buying & Selling Stocks
Stocks are an investment in a company and will allow you to reap the rewards of that company’s profits. Buying shares in a company is like owning a small part of it and you’ll receive dividends based on the company’s profits. Certain stocks also allow additional benefits, such as being part of the decision-making process for business-related matters and the direction of the company.
The value of the company you invest in is determined by the price of its shares on the stock market. Many factors can have an influence on the price of shares, such as the news, the economy, major business changes, as well as the number of current investors.
If your timeframe for investment is relatively short (5-10 years), you’ll want to invest in a more aggressive stock that has the potential for quick growth, but there can be some risk involved if that company doesn’t grow as projected.
Investing in Cryptocurrencies
You’ve probably heard the term “Cryptocurrency” and you may wonder if this is real and if it is safe. Cryptocurrencies are an intangible and decentralized means of payment. These currencies have digital encryption that gives them security to carry out financial operations without the need for intermediaries.
Thanks to the sophisticated cryptographic technology of blockchain, cryptocurrencies are relatively safe and it is difficult for them to be in danger of disappearing. Another benefit is that they’re global currencies and, since there’s no need for third parties for transactions, no commissions are paid. There are also typically no taxes involved and, if there are taxes, they’re relatively low so they won’t greatly affect your investment.
We cannot go without saying that there are risks to cryptocurrencies to take into consideration as well. This type of investment is in an intangible asset, which can be susceptible to cyber attacks. Cryptocurrencies can also cause the market to inflate since there are so many varied types of currencies to invest in - Bitcoin being the most famous, but many many others as well.
This type of currency is relatively new with quite a bit of fluctuation in regards to price over time which make them more volatile. With this volatility comes the greatest risk -- that you could lose a large portion of your investment over time. The choice comes down to how much risk you’re willing in order to include cryptocurrencies in your investment portfolio.
Investing in Bonds
Bonds are a financial instrument for paying debts with interest. You, as an investor, will be buying a bond to lend money to the government, a company, or a public institution for a certain period of time. That company, in return, will be responsible for returning the initial capital together with a percentage of interest.
Investing in bonds can be a good option if you’re looking for useful returns and convenient long-term rates.
Investing in an Individual Retirement Account (IRA)
IRAs are unique in that they allocate your money across a diversified portfolio of stocks and bonds. This is a specialized type of mutual fund and the investment is managed with the objective of generating monthly income with a particular objective.
With IRAs, you have control of your capital and access your money at any time you want. If you withdraw part of your money, the monthly income generated by the fund will be lower.
IRAs can be a safe option for both short term, more aggressive portfolios, or long term investments over decades.
Real Estate Investment
Real estate is one of the most sought after types of investments due to its many benefits.
In countries like Mexico, real estate properties are diverse, with a broad range available in price and style, located on breathtaking beach destinations or in quaint and cultured cities.
Unlike other forms of investing, purchasing real estate ensures profitability, offers cash flow, provides access to tax breaks, promotes capital creation, and protects your money against inflation.
Real estate is a tangible asset that reduces its volatility through diversification, in addition to providing financial protection against adverse situations beyond your control (such as the COVID-19 pandemic).
Another benefit of real estate investments is that you receive a much higher interest rate than you would receive on other types of investments and financial instruments. There is also much less risk involved since a property is a tangible asset that increases in value overtime.
Real estate doesn’t depreciate.
In both short term and long term investments, purchasing real estate is an excellent option. At Tao Mexico, we have real estate properties available for purchase today in Riviera Maya - and keep an eye out for Puerto Vallarta, Los Cabos, and San Miguel de Allende which are soon to come.
If you’d like to begin putting your money to work for you and start investing in real estate this year, get in touch with us.
Our real estate advisors will be happy to assist you, answer all your questions and offer you the safest and most reliable option to grow your capital.