The principle - making money from your money
In times of greatly reduced interest rates and toothless savings accounts, it is simply not enough to put money away for your future. A consistently rising rate of inflation will decimate your savings, resulting in them having significantly less purchasing power than the present day. As such, you will need to be more active in the generation of money from your money. The principal way of doing this is by investing your money. Investing is more of an umbrella term than it may seem; there are many different ways you can invest your money, each with different approaches and levels of involvement. The following are five key ways you can make your money work for you.
Buying into the stock of a company is one of the simplest ways to invest your money. Buying stock in a growing business means you can eventually sell your stock for a higher price than you bought it, defeating inflation and providing greater returns than any savings account could. Safe investments in companies showcasing steady and predictable growth, such as electric vehicle manufacturers and social media enterprises, give you a relatively safe place to stake your money – and all the better if you have a genuine interest in the company with which you’re investing. However, with all investments, your capital is at risk and the value may go down, especially if you are only investing in one company.
Putting all of your money into a single stock, predictable as that stock may be, can prove risky; in the event that your chosen company encounters financial or administrative difficulties, your stock could lose value and you could be left with less money than you initially invested. A safer, less risky way to grow your money is through investing a stock index using indices trading, where your investment is spread between a number of companies on your behalf. This spreads the risk, increasing the likelihood of stable growth.
Starting a business
Rather than putting money into stocks of an existing company, you could instead invest that money into starting your own business from scratch. If you have found a gap in the market, or have marketable skills and experience, you can grow your money by investing it into a business plan and pocketing the profits. Your investment would be in your business’ setup – from premises to staff and marketing – instead of in stocks and currencies.
Dropshipping is a kind of business model, far less complex in design than the building of a company from scratch – and the perfect way to generate money from your money if you are already in employment, or using your skills elsewhere. In dropshipping, you essentially become the middleman between a wholesaler and consumers, creating an online store from which people can browse and purchase products. Instead of investing in, storing and supplying the stock, the order is passed straight on for the warehouse to honour, package and postage included. This is a low-effort way to invest in, and profit from, e-commerce.