You now have 100k and are smart enough not to blow off your money on luxuries. You know that the best time to make that money grow is right now but want advice on the how.
When it comes to investments, it is important to evaluate your usual expenditures and only spend what you can afford to lose. It is advisable to work with a small amount to test the waters as unforeseen circumstances may come up.
In this article, we will look at the Top 5 ways for you to grow that money in Australia so you can find a viable option that can suit you.
Invest in Property
Over the next 30 years, the Australian population is expected to increase to 35 million, so it is only plausible to invest, especially in highly populated areas since value increases as time passes by. Price growth has been pretty high, with Melbourne making its quickest recovery ever, and some parts of Sydney soaring up to 25% – 30%, thus having the fastest turnaround in years reaching to almost $50,000 in the fourth quarter of last year according to the Domain’s House Price Report.
Even with the COVID-19 outbreak and the world in recession, history dictates that real estate always picks up and has always been a classic and good long-term investment.
Even Lawrence Yun, Chief Economist of the National Association of Realtors (NAR), believes that there will be a “strong rebound” after the “temporary softening” it had on the real estate market.
When it comes to property, you can be flexible with what you can do with it, depending on your risk level. You can rent it as it may be able to cover most of your mortgage interest or renovate it to make it more appealing to buyers, you can put your money as a down payment for another property worthy more to have leverage.
Invest in Stocks
When it comes to stock, people instantly think of the “Oracle” or “Sage” of Omaha, Warren Buffett, chairman and CEO of Berkshire Hathaway, and one of the greatest investors of our time. It is because of this that novice investors tend to jump on board without understanding it completely.
Stocks in itself do not necessarily turn you into a billionaire, but with the proper research, you can get good returns on your overall investment by looking into elements such as:
- Competitive Advantage. It is crucial to invest in a company that stands out among its competitors but is not just a fad. Starting with blue-chip stocks that already have a proven track record may be a good place to start with.
- Company Performance. Although research is important among all the other reasons, it is definitely vital when it comes to this aspect as you would have to look through its past, what they are doing in the present, and how they plan to expand and keep up with the future.
- Company Position. How much debt a company has and how efficient their management is in terms of multiplying their profit margins are factors that need to be taken into consideration before putting any amount of money into any particular business.
The key is also partnering research with the right timing, which can be difficult as events can be unpredictable.
Even people like Buffet can make a mistake, such as his investment with the airline industry, which suddenly plummeted downward amid the COVID-19 pandemic. It is not all bad as those who have invested in healthcare and technology, for example, are definitely winners despite the crash.
There are numerous tutorials online to learn more about making the best of your money in the stock market. However, studying the market is a skill and may be overwhelming. Therefore, there is always the opportunity to opt for a reputable stockbroker. Even still, it is important to study which brokers will make your money worthwhile.
Invest in Gold
Gold is a precious metal, and its market is one of the largest in the world. It is a more stable investment as it does not get as affected by the economy with aspects like inflation in the way other investments such as stocks do.
But because it is so secure, it does not give gross annual returns as high as stocks even though it is a long-term investment. The value is dependent on the price of gold over time. Investing in gold is also a good method to broaden the assets on your portfolio.
An Australian may be able to invest in gold through the following:
This is the more traditional way to go about investing in gold. It can come in the form of bars (i.e., minted bullion bars and cast bars), coins (a common one would be the Australian Kangaroo Gold Bullion Coin), and jewelry. It is preferred that these are securely stored in a bank vault.
Invest in ETFs
A good alternative would be through gold-backed exchange-traded funds as the pricing is transparent so it is close to the actual price of gold. This works by owning shares of a fund that owns physical gold. Through this method, you can own gold without having to pay storage fees and avoid hustling to buy and sell gold yourself.
However, it is important to note that there are expenses such as fund management and broker cost that need to be taken into consideration, though this is not generally too high. Some gold ETFs listed on the Australian Securities Exchange (ASX) are:
- ANZ ETFS Physical Fold ETF Fund (ASX: ZGOL)
- BetaShares Gold Bullion ETF (ASX: QAU)
- ETFs Metal Securities Australia Ltd (ASX: GOLD)
Gold Mining Companies
You can take equity in companies that mine gold. Gold miner’s stocks can be closely compared to the price of gold. However, this is a riskier way of investing in gold as it will be highly dependent on the gold miners’ experience on whether there are further developments to finding gold, especially if they are going through an exploration phase. The outcome can either amplify your gains or sever your losses.
A more modern approach would be to buy and sell gold through an e-commerce corporation such as eBay, although this is not usually recommendable as you can only guarantee the genuineness of the gold that you have purchased when it is evaluated. In the unfortunate case, it is not authentic, you may not be able to reach or trace the seller again. If you are a seller, though, you may be able to rate your price higher, especially to neophytes in gold trading.
Invest in Cryptocurrency
Cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and Ripple, is definitely a fresh take on investing. In fact, it is debatable as an asset class and can be deemed as rather volatile. Nevertheless, it has started to be more prevalent, and governments around the world have started to recognize the potential crypto has on a sustainable future.
Countries such as the United Arab Emirates have been building more smart and eco-friendly cities, as is evident in Abu Dhabi and Dubai, and are looking to completely adopt blockchain-backed systems.
Cryptocurrencies have been rising in their value even after going through a bubble burst in 2017 when it crashed from around 29000 AUD (20,000 USD) to around 4600 AUD (3150 USD), so it is an investment that does seem like a wise decision especially while it is at a slump.
As of writing, 1 bitcoin Is equivalent to 13,741.94 AUD. When Bitcoin began trading, 1 Bitcoin was valued at 0.012 AUD (0.008 USD) and shot up to 0.12 AUD (0.08 USD) all in a matter of five days and just moved up from there. This, therefore, shows that those who have invested in Bitcoin early were able to gain significantly.
Like everything, filter through the hype. Research is essential to be able to invest in the right currency and to be able to analyze trends.
Fixed Term Deposits
Cash assets like term deposits are the most liquid or, in other words, can easily be transferred into cash. A fixed-term deposit is exactly what its name suggests. It is an amount of cash that is fixed and so cannot be accessed until a certain time frame is over. While this amount is locked, interest will be added and will accumulate. Having an amount as big as 100k will yield a substantial sum.
It should be noted that penalties will apply if and when, by any chance, you end up claiming your funds before the specified period is up. Returns that are generated are usually lower compared to others mentioned, but it is a low-risk way to get something out of your income.
Banks are also not the only ones that offer fixed deposits and, in fact, pay out the least amount of interest. You can also avail these time deposits by opening an account at finance houses or credit unions.
A finance house usually offers large interest rates, which greatly beneficial in terms of your money but only accept a large amount of money. The credibility of finance houses is not as trustworthy as banks, so it is with the utmost importance to pick one that is at least regulated by the government.
There is no definite way to invest your 100k, but the options mentioned above will be able to guide you into how to best work around your money to match your substantial needs in the present and future. There will always be potential risks involved with all different types of investments.
This does not mean that investments are a gamble just to be able to make a profit. No matter how much of a risk-taker you are, as long as you are able to make sure to do your homework on the endeavor you choose to partake, you will be able to attain your financial goals properly.
Nothing beats research. Seep through the noise because it might be a trend, and it just might end up costing you your money. It is also key to not put all your eggs in one basket and diversify asset classes. This will help you in not being completely exposed by any unpredictable event or economic sector. Proportion your money after assessing any calculated risks. It is also good to seek financial advice through an advisor to go through any other investment alternatives available.