Cryptocurrency is a digital currency that is created and managed using superior encryption techniques known as cryptography. Many economists predict that a big change in cryptocurrency is forthcoming as there is a possibility cryptocurrency will be floated to Nasdaq.
Before we list the top cryptocurrencies, we need to mention a few key reasons to invest in cryptocurrencies:
Security: when you invest in cryptocurrency, you don’t have to share your personal information and that prevents your data from being stolen. Lower cost: the value of cryptocurrencies is much lower than traditional exchanges. Portfolio diversification: cryptocurrencies can also be used to diversify your portfolio investment and maximize your return on investment potential. Volatility: cryptocurrencies are highly volatile and this principle can work for you or against you. Studying the chart, graphs, and bars of past trends can help you get good traction.
The five best cryptocurrencies to invest in 2020 are:
You may have heard that a balanced investing portfolio includes both stocks and bonds, with the ratio between the two varying depending on your age and risk tolerance. Most financial advisors will recommend increasing the proportion of bonds in your investment portfolio as you get closer to retirement, the better to counterbalance the risk of a market crash wiping out your net worth. But what exactly is a bond, and how does it work as an investment? Whatever your age, understanding how bonds works and how they should fit into your portfolio is crucial.
What Is a Bond?
A bond is a type of investment in which you as the investor loan money to a borrower, with the expectation that you’ll get your money back with interest after your term length expires. Bonds are a type of fixed-income investment, which means you know the return that you’ll get before you purchase. Bonds can be issued, meaning put up for sale, by the federal and state government as well as companies. Bonds are one of two ways you can invest in a business. The other is to buy a company’s stock. While bonds represent a debt investment – the company owes you money – stock represents an equity investment, which means you own part of the company.
How Do Bonds Work?
When you buy a bond, you’re lending money to the entity that issued the bond, whether that’s a company or a government. Since you’re lending, that means you’re entitled to collect interest. When the bond matures, you’ll get back the money you paid for the bond, known as the principal or the par value, and you’ll also get interest on top of it. When you’re shopping for bonds, you’ll be able to see each bond’s price, time to maturity and coupon rate. The coupon rate is the annual money you’ll receive, expressed as a percentage of the principal that you pay to buy the bond. Coupon rates for new bonds hover around the market interest rate.
So, if you purchase a two-year bond with a par value of $1,000 and a coupon rate of 4%, then you would earn $40 in interest for each year of the term and $80 in total interest. Most bonds will pay out interest twice a year on what are called coupon dates. This is fairly straightforward, but things get more interesting when we think about reselling these bonds on the secondary market.
When the general interest rate goes up, the price of existing bonds falls. In other words, interest rates and bond prices have an inverse relationship. Think of it this way: If interest rates rise, new bonds that are issued will have a higher interest rate to reflect this change. If you go to sell a bond that has the old, lower interest rates, you’ll have to lower its price to get anyone to buy it. That’s because the opportunity cost of holding your old, lower-coupon-rate bond has risen. Potential buyers will think, “Why pay $1,000 for a bond paying 4% when I could pay $1,000 for a bond paying 5%?”
Creating a financial plan is often perceived as a conscious effort in putting your money in order to attain financial objectives. It is a step-by-step process to help investors meet their life goals. However, contrary to popular opinion, it does not end at mere investing. It is so much more than that. There are certain other things to consider when beginning your journey in financial planning.
The way you approach to your financial plan is dependent on how financially secure an individual is. In essence, a financial plan for someone who has just started out with his investments and who is the fairly new to the investment world would be substantially different from someone who has accumulated a substantial amount of wealth by now. Let’s understand this better. Read on to know more.
If You are New to the Investing World
If you just started with your investments, there are certain things to be taken care of. For starters, you must have an appropriate health insurance policy in place that will help you tend to significant medical bills. Next, if you have financial dependents such as your partner, children, or elderly parents, you must get a life insurance policy. Having a life insurance policy in place will take care of your family’s needs when you are not around to tend to them. However, in life these are not the only contingencies that can arise. You might be faced with an untimely death of a family member, or job loss, or home repair, or any other emergency. For such circumstances, you must have an emergency fund in place. An emergency funds helps you take care of such unforeseen expenses. Experts suggest that you must dedicate at least three to six months’ of your living expenses towards emergency funds. These funds can be further invested in investment options with high liquidity. Examples include money market instruments and liquid funds.
Your financial plan might fall through if you have not catered to these requirements first. Lastly, you must try to get rid of any type of debt you might be having. High-interest loans such as credit card debt or personal loans can take a significant part of your take-away salary or incomes.
If You Have Accumulated a Substantial Corpus of Wealth
If you are at a position in life where you not only have created all safety nets for you and your family, but also possess certain investments that help you to attain your financial goals. At this stage, you must ensure you have a diversified investment portfolio which can help you offset the losses arising from one type of investment against gains by another. Also, note that though you might already have a life insurance policy, health insurance plan, and an emergency fund in place, you must take into account the growing size of your family. You must remember at all stages of investing that financial planning is a continuous and dynamic process. It requires continuous monitoring and reviewing of your investments and investment portfolio. Happy investing!
Investing in real estate has serious appeal. It can not only diversify your portfolio, but it can also create a long-term stream of income if done correctly. Whether you want to be a landlord or invest in real estate by way of a Real Estate Investment Trust, we’ve identified the key steps with our guide to real estate investing. Below, we explore the different types of real estate investing, and we outline process needed to begin.
Steps You Need to Take to Start Investing in Real Estate
Do your research. You’ll have a range of options for real estate investments, but it’ll be useful to know about the different properties and investments available. There are generally five different types of real estate: residential, industrial, commercial, mixed-use and retail. After you’ve chosen the property, you can then pay for it.
Use cash to pay the downpayment on the property. The other option is to finance the property through mortgages or other loans, but you’ll gradually lose money to interest payments. With cash you won’t have to pay any interest at all, and you’ll earn more money if your property’s value appreciates.
Determine the tax implications of your investment. Taxes vary for different types of property, so it’s wise to know the applicable tax laws. You can also hire a professional, such as a certified public accountant (CPA), if you’d like extra help with this step.
Prepare for risks. Any investment presents some level of risk, so you’ll want to be prepared for any unforeseen market fluctuations. If you take the rental property route, you’ll need to account for maintenance, repair and other costs. Any real estate investment will offer some semblance of uncertainty. Whether your property’s value appreciates or depreciates, you’ll need to have a solid back-up plan.
Manage your investment(s). Closely monitoring both the market and your property will help you to anticipate any sudden market changes. If you’d like professional guidance here, a financial advisor can help you with things like budgeting, investment planning and asset allocation. Our free financial advisor matching service can help you find the ideal advisor.
Folks who have their hearts set on early retirement and financial independence may find that owning real estate is a key component of their financial plan. That’s because investing in real estate can create large sums of (mostly passive) income, the Holy Grail of financial independence. On the flip side, if you find yourself owing more than your investment properties are worth and you have trouble finding tenants, real estate investing can backfire. It’s important not to get in over your head.