What kind of investments are available to the average person?
I am an ordinary average Pole earning the national average. So, what kind of investments are available for the average person?
I am an ordinary average Pole earning the national average. So, what kind of investments are available for the average person?
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Those who withdraw money emotionally because they have overestimated their risk resistance or felt they needed money sooner than planned are the worst offerers of investments. Therefore, if you will have larger expenses soon, it's best to just put your savings on a deposit. This way you will avoid stress and unnecessary costs related to early termination of certain contracts.
Before making any decision, you need to determine what investment horizon you are interested in. We distinguish short, medium and long-term investments. Some assets, such as deposits and bonds, belong to more than one group because they offer different types and maturity dates.
Short-term investments are for those people who want to liquidate funds easily within 12 months. These can be deposits, savings accounts, purchase of foreign currencies, and even stocks on the stock exchange - the only important thing is whether this asset can be quickly sold if necessary. Profits depend on the degree of risk. For example, on cryptocurrencies, depending on the market situation, you can earn a lot, break even or even lose. You will not lose on the deposit, but the shorter the term, the lower the interest rate at the bank. Something for something.
Medium-term products are expected to generate profit in 2-5 years. These include some mutual funds, deposits and bonds. However, you need to carefully check in the contract whether we have an obligation to freeze funds for a certain period of time, or whether they can be terminated earlier. Some also include cryptocurrencies here, because the Bitcoin cycles have been around 4 years so far, but there is no guarantee that it will be the same in the future.
Usually, the highest rate of return is offered by long-term investments, but in this case, take into account the time horizon of 5-10 years. Examples of such investments are the purchase of real estate to sell for a certain period of time or a stock on the stock exchange. Each stock market has its better and worse times (i.e., bullish and bearish periods), but patient traders average risk and increase their chances of exiting at the right time in the cycle. Also in the real estate market, every few or several years we have to deal with a bursting of the bubble, which results in a fall in house and flat prices and a limited number of people interested in buying. After a while the situation calms down and prices go up again with the arrival of new customers.
If you don't want to wait that long, have less capital, or are afraid of risk, think about bonds or some safer mutual fund. There are many types to choose from, but the problem is that inflation may be greater than profits these days. These investments have a low degree of risk, but especially with bonds, you must decide to freeze your funds for at least 6 years for this to make sense.
In the long term, gold and silver are also a good security for your capital, but that doesn't mean you will make profits comparable to other assets. Sometimes you have to wait several years for the price of the bullion to return to the previous level after a decline. The advantage of precious metals is that they have been synonymous with value for centuries, they cannot be printed or closed, and the purchase of single ounces or grams is within the reach of almost everyone.
If I were faced with such a decision, I would divide the money into 3 parts and diversify my portfolio between different financial instruments. I would avoid the most risky ones, unless you intend to constantly monitor the market and educate yourself about it.
Those who withdraw money emotionally because they have overestimated their risk resistance or felt they needed money sooner than planned are the worst offerers of investments. Therefore, if you will have larger expenses soon, it's best to just put your savings on a deposit. This way you will avoid stress and unnecessary costs related to early termination of certain contracts.
Before making any decision, you need to determine what investment horizon you are interested in. We distinguish short, medium and long-term investments. Some assets, such as deposits and bonds, belong to more than one group because they offer different types and maturity dates.
Short-term investments are for those people who want to liquidate funds easily within 12 months. These can be deposits, savings accounts, purchase of foreign currencies, and even stocks on the stock exchange - the only important thing is whether this asset can be quickly sold if necessary. Profits depend on the degree of risk. For example, on cryptocurrencies, depending on the market situation, you can earn a lot, break even or even lose. You will not lose on the deposit, but the shorter the term, the lower the interest rate at the bank. Something for something.
Medium-term products are expected to generate profit in 2-5 years. These include some mutual funds, deposits and bonds. However, you need to carefully check in the contract whether we have an obligation to freeze funds for a certain period of time, or whether they can be terminated earlier. Some also include cryptocurrencies here, because the Bitcoin cycles have been around 4 years so far, but there is no guarantee that it will be the same in the future.
Usually, the highest rate of return is offered by long-term investments, but in this case, take into account the time horizon of 5-10 years. Examples of such investments are the purchase of real estate to sell for a certain period of time or a stock on the stock exchange. Each stock market has its better and worse times (i.e., bullish and bearish periods), but patient traders average risk and increase their chances of exiting at the right time in the cycle. Also in the real estate market, every few or several years we have to deal with a bursting of the bubble, which results in a fall in house and flat prices and a limited number of people interested in buying. After a while the situation calms down and prices go up again with the arrival of new customers.
If you don't want to wait that long, have less capital, or are afraid of risk, think about bonds or some safer mutual fund. There are many types to choose from, but the problem is that inflation may be greater than profits these days. These investments have a low degree of risk, but especially with bonds, you must decide to freeze your funds for at least 6 years for this to make sense.
In the long term, gold and silver are also a good security for your capital, but that doesn't mean you will make profits comparable to other assets. Sometimes you have to wait several years for the price of the bullion to return to the previous level after a decline. The advantage of precious metals is that they have been synonymous with value for centuries, they cannot be printed or closed, and the purchase of single ounces or grams is within the reach of almost everyone.
If I were faced with such a decision, I would divide the money into 3 parts and diversify my portfolio between different financial instruments. I would avoid the most risky ones, unless you intend to constantly monitor the market and educate yourself about it.
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Stocks are probably the best-known option, but picking and choosing individual companies to invest in isn't the way most people engage with the market. Instead, you could consider creating an index fund that invests in securities that make up indices such as the S&P 500.
Another important asset category is bond investments, where you lend money to a corporation or government at a fixed interest rate. They tend to offer lower returns than equities, but they also tend to be less risky as their prices depend largely on the creditworthiness of the bond issuer as well as the bond's interest rate rather than market fluctuations.
In general, the longer you hold money, the more risk you can take; this may mean you have more equity investments (like stock index funds) in your portfolio. However, the closer you get to your paycheck, the more you may want to lean towards conservative assets like bonds because you want to reduce the volatility of your portfolio the more you need the money.
In addition to stocks and bonds, there are alternative investments such as real estate and commodities. In the past, if you wanted to invest in real estate, you would probably have to buy real estate - but now you might want to consider investing in real estate mutual funds, also known as REITs.
Stocks are probably the best-known option, but picking and choosing individual companies to invest in isn't the way most people engage with the market. Instead, you could consider creating an index fund that invests in securities that make up indices such as the S&P 500.
Another important asset category is bond investments, where you lend money to a corporation or government at a fixed interest rate. They tend to offer lower returns than equities, but they also tend to be less risky as their prices depend largely on the creditworthiness of the bond issuer as well as the bond's interest rate rather than market fluctuations.
In general, the longer you hold money, the more risk you can take; this may mean you have more equity investments (like stock index funds) in your portfolio. However, the closer you get to your paycheck, the more you may want to lean towards conservative assets like bonds because you want to reduce the volatility of your portfolio the more you need the money.
In addition to stocks and bonds, there are alternative investments such as real estate and commodities. In the past, if you wanted to invest in real estate, you would probably have to buy real estate - but now you might want to consider investing in real estate mutual funds, also known as REITs.
Machine translated
Machine translated