In Part 1 of this series, we looked at the stock market, real estate investing and cryptocurrency. Today, our main topics will include investing your money into debt (your own, others, lending, etc.), physical assets and CDs. Like always, I challenge you to do your own research to really figure out whether or not a type of investment in a good choice for you and your portfolio. With that, let’s dig in!
Types of Investments
Lending: Have you thought about letting someone else use your money in return for a premium? You could give it that person in your local real estate meet up who needs investors for their apartment complex deal, or maybe the other guy in your real estate meetup who is building his own storage facility? Lending literally means giving people your money and they have to pay it back to you and then some. Depending on the terms of your contractual agreement (very important – do not just hand out money like fun coupons), you could end up with a 12% return or higher!
I have not had any personal experience lending but have heard good things about the sites Lending Club and Upstart. In case you don’t know anyone personally that could use the jump start, these online websites may be worth looking into.
Debt: No this isn’t a duplicate of lending. This is here to remind you to pay your own debt. This is a form of investment and you are really paying your future self by doing this. Once you pay off any debt you owe, you will have more of your hard earned dollars kept in your own pocket. This will allow you to invest even more of it in any of the assets of your choosing!
I would even argue that paying off your debt counts towards increasing your savings rate since it is directly helping you keep more money. Start by choosing your debt that has the highest interest rate and pay that off first, then work your way down until you have paid off all of your debt.
My personal experience with paying off debt as a form of investment was for student loans. I was able to pay off all of my student loans which allowed me to keep more than $300 of my monthly income. This greatly accelerated my savings rate and also gave me this feeling of relief of no longer having to worry about owing someone money.
Gold/Silver: More physical assets however these tangible ones are definitely more of the size that can fit in your Safe, as opposed to the much larger sized real estate. Gold and silver have been investments for hundreds of years, always being a form of money for trade.
The price of gold is constantly tracked throughout the day by top investors and I bet you even know someone who actually owns some gold (yes, jewelry counts). However, this is not something I am invested in. Why? Well, call me lazy but who wants to lug around gold bars all day?
No, in all seriousness. I am not invested in gold because I have found the returns and requirements of real estate, cryptocurrency and the stock market to be enough for my portfolio at the moment. That said, if you are looking for a relatively secure investment then gold may be the path for you!
CDs: Certificates of Deposits are merely when you take your money to the bank and have them guarantee that your money will be there (plus a teeny bit of interest) in X amount of time. Many people will use a strategy called laddering CDs, which is when they invest their money in multiple CDs each of which is matured a year away from each other. For example, you invest $2,000 to be there for you in 2020, $2,000 in a CD to be matured in 2021, $2,000 to be matured in 2022… and so on.
This strategy is not one I have used nor will I until I am nearing retirement and would like to have a strong cash position. The benefit of CD’s is that a bank is guaranteeing your money will be there and paying you a little for your money but the downside is that for the most part, the interest on CDs is usually less than inflation so in a lot of cases you may actually be losing your money by investing in CDs.
Crowd Funding: Real Estate Crowd Funding
This is something that is getting more and more popular. It really has been a recent thing ever since new regulations were passed allowing non-accredited investors to be able to tap into this form of investing. What this investment is, is really very passive for you the investor. It differs website to website, but the general idea is that the websites team finds a deal and then posts about the deal with all accurate financial data to try to allure you into investing in it. The site’s goal is to pool investors money to be able to not only purchase the deal but do any sort of rehab and extra work necessary to get it into resell or rent shape. Some websites that do this include: Fundrise, Realty Mogul and Roof Stock.
Final Thoughts
Any of these investments listed from Part 1 and Part 2 may or may not work for you. It really is entirely dependent on your risk profile, investment goals and really just what your personal preferences are. As I previously mentioned, make sure that you do your own research before investing any money. These articles are really meant to give you a general idea of what assets there are out there to invest in. You don’t have to do the traditional stock market route to be successful.
Thanks for reading! Are you invested in any of these assets? Let us know in the comments!
For more recent reads, check out these articles!
Gina DiMasi
Gina DiMasi is an organizational finance whiz. Gina is an avid investor, educator and aficionado of bitcoin and other modern investments. In addition to being an all around nice person, Gina has a degree in personal finance studies from Framingham State University. When she's not running numbers or blogging up a storm, Gina actively volunteers with Habitat for Humanity.
You don’t want physical gold and silver?
A lot of people don’t…which is too bad, because its very emotionally satisfying. The bars are heavy and they make a nice clink.
That sound of gold clinking can definitely be satisfying! I personally don’t, to be a true millennial – I don’t like having too many physical things. That said, it is definitely not the worst investment!