It has been said that the only two ways to make money are to work for it or make your assets work for you. But no matter how much you drive that whip, your assets don’t seem too much concerned for your desire for passive income. This is where investment solutions come in. Saving all your money in your back pocket doesn’t get it to work for you, while investing it can earn you interest.
There are numerous investment solutions available to individuals, some of which may require a broker and others not. Individuals can choose to invest in stocks, mutual funds, bonds and options. You can also invest in real estate, small businesses or precious metals (such as buying gold or Kruger Rands which increase in value).
Investment solutions with stocks
A stock is a share in a company. It represents a claim that an individual has on that company’s assets and earnings. When buying stocks, you can choose to purchase common stocks, which are shares that give the shareholder a right to vote on company decisions and a claim to assets, or preferred stocks, which are shares that don’t give the shareholder a right to vote, but offer a higher claim on assets and earnings.
Investment solutions with bonds
A bond is essentially a loan that is given to a company, government, municipality or other third party by an investor. The loan earns interest at a certain rate (which can be fixed) for a defined period, which the lender is to pay to the investor. The investor earns money on the debt, which is cancelled once the capital is repaid.
Investment solutions with mutual funds
A mutual fund is operated by a fund manager. It is a fund where a group of individuals or companies pool their money for investment purposes. The group gives the money to the manager who then invests it on their behalf in stocks, bonds, money market accounts or other assets. Mutual funds are good for individual investors as it gives them access to professionally managed and diverse portfolios. Each shareholder of the fund participates proportionately to how much he or she invested (that is, they lose or gain according to the amount they put into the mutual fund).
Investment solutions with options
An option is a contract sold by one party to another. The contract gives the buyer the option to sell or buy a stock, security or other financial asset, at an agreed price during a certain time or on a certain date.
If you want to stop cracking a whip at your house, we can get investment solutions for you. Fill in our online form to get in touch with a broker.
Want to learn more about investment solutions? Read about Absa Investments.
