What To Consider When You Have Money To Invest

While it is nice to have money to invest, deciding where to safely invest money to earn a decent rate of investment return can be difficult. There are many investment options, some of which are dependent upon the amount of money to invest and the investment time-frame.

Before considering where to invest money, it is important to understand what investing is. Those with money to invest must realize is that investing money and trading money are not the same thing, and mixing the two can have disastrous results. An investment is a long-term commitment to place money in a safe financial product with the assumption that over time the investment will grow in value. A trade is a short-term purchase of a financial product that is done in an attempt to capitalize on near-term events that may affect the price of the financial product.

Those with money to invest need to focus on long-term investing that will allow their money to safely grow over time. If the money is needed in the short-term, then it should be held in a savings account or cash-equivalent financial product, such as a Certificate of Deposit (CD), rather than invested in long-term investments.

Some Investment Options For Those With Money To Invest

While not a complete list of the myriad of investment options, the following are some investment ideas that those with money to invest should consider.

• Buy Dividend Paying Stocks – Over the long run, dividend-paying stocks outperform the stock market handily, and can be good long-term investments.
• Buy Dividend Paying Funds– To diversify long-term investments and earn returns that have a better chance of beating the stock market averages, buy dividend paying mutual funds or exchange traded funds (ETFs).
• Buy Bond Funds – While buying individual bonds can be difficult for individual investors and carry the risk of default, buying bond funds is as easy as buying mutual funds and ETFs that invest in bonds, which spreads the risk of bond default amongst numerous bond issuing entities.  Selecting the right bond funds can result in good long-term investment returns.
• Buy Real Estate – Although real estate suffered significant declines during the Great Recession of 2008 and 2009, buying real estate is still a good long-term investment, as real estate prices have historically increased over time. Buying real estate is also a good way to diversify long-term investments for those with money to invest.

Long-term investment returns can be increased if the dividends from stocks or funds are reinvested to purchase additional shares of the dividend paying stocks or funds. The key thing that those with money to invest need to focus on is the potential for long-term investment gains, and avoid worrying about short-term market gyrations.

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