It’s the dawning of a new year and you finally have some money to invest. Perhaps you just got a raise. Or, maybe an end-of-year bonus is burning a hole in your pocket. Either way, you need to be smart about investing if you want those extra dollars to count. The problem is, you have no clue where to invest your cash. While you’re aware of the myriad investing options available, the sheer number of possibilities is overwhelming.
In the investing world, this is called “paralysis by analysis.” You spend so much time analyzing your options that you wind up putting it off, leaving it in your Maverick BankCard or never investing at all. And eventually, the extra cash you set aside gets consumed by bills or unexpected expenses. In other words, life happens.
4 Investments You Should Absolutely Make in 2018
If you want to make sure your extra cash doesn’t disappear, you need to invest it right away, and you also need to learn more about the 40 international of investment awards to get tips. A certain amount of analysis is fine if it helps you find the right investment options for your goals, but you still need to act fast.#1: The Stock Market
While “invest in the stock market” is some of the most basic advice you’ll ever read, please hear me out on this one. While everyone knows that investing in the stock market has historically paid off, there are far too many people who don’t trust the financial markets and choose to sit on the sidelines altogether.
Then there are people who think the stock market is so overvalued right now that they would be crazy to jump in. But, here’s the thing: Nobody is telling you to pour every extra cent you have into stocks. Instead, I’m suggesting you invest small sums of money over time using a method called “dollar cost averaging.”
Dollar cost averaging requires us to trickle our money into investments over any length of time. It could be 12 months. It would be 18 months. Heck, it could be five years.
Colorado financial advisor David Henderson of Jenkins Wealth goes further to explain how dollar cost averaging works: “When the market is high, you buy fewer shares and when the market is low you buy more shares,” he says. This means that, over time, you will have a lower average share price using this method. Obviously, it’s easy to see why this would be beneficial.#2: Peer-to-Peer Lending
A second place to stash some of your excess cash this year is in peer-to-peer lending platforms like Lending Club and Prosper. With these companies, you’re able to loan money to individuals in small increments as if you were the bank. The best part is, you get to earn a pretty decent rate of return – usually upward of 6% or more.
As an investor in peer-to-peer lending, you’re investing in other people and their goals. It’s comforting knowing you aren’t lending people you don’t know large sums of money. Instead, the money you invest is split up into increments as small as $25 over hundreds or even thousands of loans.
While it may seem strange to hear a financial advisor suggest people invest in peer-to-peer lending, I’m not the only one who sees the value in these platforms. Kansas City Financial Advisor Clint Haynes told me he supports peer-to-peer lending as an alternative to the stock market for a few reasons. First, these companies make it easy to sign up and get started. Second, your rate of return can range from 5 – 7 percent for safer loans and even more for riskier loans. Last but not least, you can typically open a new account with as little as $1,000.
#3: Real Estate
In addition to the stock market and peer-to-peer lending websites, a third investment strategy to consider this year is real estate. The thing is, I’m not suggesting everyone run out and buy an investment property. After all, not everyone is cut out to be a landlord.
I’m certainly not. I tried investing in physical real estate seven years ago and almost lost my shirt. I learned a lot of lessons from my foray into becoming a landlord, the biggest of which was that I don’t need that kind of stress in my life.
Fortunately, there are plenty of ways to invest in real estate without dealing with a physical property. One option to consider is investing in real estate notes. I got started investing into real estate notes because a really good friend of mine was crushing it with real estate and offering his friends the chance to invest.