If you want to make your money go further, you need to look beyond savings accounts. With interest rates still low, leaving money languishing in a poorly-performing account is not going to maximize the return you can get from your cash.
Investing in any form does come with a risk – there’s no getting away from that – but with a diverse portfolio of assets, you can deliver much stronger returns.
Where do you start? Here are the top ten assets to consider for a winning portfolio.
Anyone who has been abroad will understand the basics of the foreign exchange market. This is the biggest market in the world and is the most volatile, with the prices of currency pairs rising and falling thanks to a whole host of factors. If you can learn to spot these trends, then this volatility can provide a real opportunity to make money.
If forex is renowned for its volatility, then gold is renowned for being a ‘safe’ asset that investors turn to in times of crisis. Gold, as American Bullion notes, typically performs well during times of financial or political crisis, making it a more than useful addition to your portfolio.
Gold isn’t the only commodity to consider. Oil is also a key asset that investors should be aware of. Anyone with an eye on the oil price will have noticed steady growth in the price of a barrel of oil since last summer – jumping from a little over $40 a barrel to above $60. This has been partly driven by a commitment by oil producing nations to cut production levels.
Sitting in the shadow of gold and oil, copper is no less worthy of a mention. With global capital expenditure set to rise in 2018, commodities such as this should enjoy strong growth as a consequence.
It’s not all about commodities, however. Bonds are, in effect, IOUs issued by governments, companies or municipal authorities in which you lend an amount of money for a certain number of years and are paid an interest rate in return. The risk here depends on who issues the bonds, with government bonds generally seen as the safest.
6. Equity funds
It would take a lot of effort – and money – to invest in a diverse enough portfolio of stocks. That’s where equity funds come in – offering you the large to buy ownership of a whole basket of securities, managed by professionals who have a strong understanding of the market.
How about an investment into a relatively new, exciting – and volatile – asset? Cryptocurrencies captured the attention of investors across the globe in 2017, with Bitcoin soaring in value from less than $1,000 to almost $20,000. While the value has fallen since then, there’s still potential in Bitcoin or rival cryptocurrencies such as Litecoin or Ethereum or Ripple, making this an ideal choice for a tech-savvy investor.
If you’re more comfortable in the property market than the financial market, then you might wish to put your cash into bricks and mortar. You can choose to rent this out for a short-term income intending to selling when the time is right. This isn’t a particularly liquid asset – so don’t expect to be able to cash in a hurry – but it could be a worthwhile long-term investment as part of your portfolio.
9. Peer to peer lending
Want to do something worthwhile with your money? Peer to peer lending allows you to offer up your cash to be borrowed by up and coming entrepreneurs and small businesses. Lending platforms such as Zopa and Funding Circle should vet borrowers in advance for you.
10. Contracts for difference
It’s worth noting that you don’t have to own an asset to benefit from price movements. With contracts for difference (CFDs), you trade a contract based on prices derived from the underlying market. Alternatively, spread betting allows you to speculate on the financial markets, again without having to own the asset outright. Perhaps more for experienced traders, CFDs and spread betting allows you to add variety to your portfolio using your knowledge of the markets.