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6 ways investors make money

Justin Weinger

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Have you been wanting to get involved in investing but aren’t sure where to begin? It’s common for people to look at a large savings account balance and decide to put that capital to work. Bank passbook accounts pay super-low interest, and even certificates of deposit offer small returns. If you’ve decided to check out the stock, commodities, or cryptocurrency markets, there’s plenty to choose from. In fact, there are dozens of interesting ways to invest, from real estate and precious metals, to collectibles and day trading. Consider the following six areas and see which one best suits your personal investing style and risk tolerance.

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6 ways investors make money. Source: shutterstock.com

Traditional stock market investing

The bread-and-butter for millions of working people is the stock market. There are many ways to go about buying, selling, and earning profits on the securities exchanges. Two of the most common techniques are buy and hold, and swing trading. If you occasionally add corporate shares to a self-directed retirement account or investment portfolio, you are already engaging in buying and holding for long-term growth. If you enjoy a quicker pace and spend a few hours each week getting into and out of positions, aiming to turn a profit by buying low and selling high, then you fit the definition of swing trader. Either way, these two methods are among the most beloved ways for people to get involved in the world of investing.

Day trading

Day trading is a fast-paced, high volatility way to take part in the securities markets. The name comes from the fact that participants never hold a position overnight. If you are new to this kind of activity, it’s smart to stick to popular day trading stocks, namely the ones that professionals and long-time traders’ use. You can find lists on any brokerage or financial site. Make sure to check with your broker about specific rules that apply to this type of buying and selling. If you want to use margin, for instance, you’ll be subject to minimum account balances and other special requirements. For those who enjoy rapid deal-making and split-second timing, this can be an excellent way to invest.

Real estate

Some dislike stocks and bonds but prefer tangible assets like real estate. You don’t need to be wealth to purchase a small residential home or plot of land, improve it, and then resell it for a profit. In the past two decades, house flipping has become one of the fastest-growing niches for active investors.

Precious metals

Earning money with precious metals like gold and silver is an occupation as old as human history. In modern times, it’s possible to buy bullion, store it, and then resell it when prices go up. Another strategy is to buy shares in mining companies, whose prices typically rise with the current value of metals like gold, silver, platinum, and palladium.

Collectibles

Two of the most popular collectibles niches are works of art and fine wines. Both have large and very active investor communities, both online and off. Expect to spend about $1,000 to get started with either one, and be ready to hold your assets for several years before selling them at higher prices. For collectibles, the big challenge for ordinary investors is storage. Unless you already have a temperature-controlled wine cellar or secure storage facility for art, you’ll need to pay someone to hold the items for you, which is a cost of doing business in these interesting, potentially very profitable activities.

Cryptocurrency

Unless you have been living on another planet for the past decade, you have heard of the surging cryptocurrency market. Every day, millions of people buy, hold, sell, trade, spend, and speculate on the likes of Bitcoin, Ethereum, Litecoin, and hundreds of other forms of virtual money. In fact, this segment of the investment universe is so large that it has its own exchanges, storage methods, ranking systems, trading rules, experts, websites, and chat communities. There are many things to be ready for, including huge price volatility if you choose to get involved in crypto. Prices of even the most stable, well-known coins rise and fall by as much as 50 percent of their total value on a moment’s notice. Spend plenty of time researching your chosen cryptocurrencies before making purchases. If you like action and unpredictability, this segment could be a good choice.

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