If there is one thing that everyone should want in today’s economy, it’s financial freedom. Financial freedom means something different to each person because it’s a personal goal. However, in general terms, it means that you have enough savings, cash, and investments to afford the lifestyle that you want not only for yourself but for your family.
Having financial freedom also means that you will be able to pursue the career that you desire without being driven by the promise of a certain income, or retire at a specific age (perhaps even earlier). However, it also goes without saying that this is a difficult journey to embark on. Many do not have sufficient financial education as to where their money should go. For beginners and novices who want to start the road to financial freedom, try these investment ideas.
Physical Real Estate
If you want to start building wealth, real estate may be one place to start. The reason why this is a popular asset for many is that it is easy to understand and generates income.
It is highly likely that any rich person you know owns multiple properties. Fortunes can potentially be made through real estate. It’s the same reason why billionaires such as Donald Trump can remain billionaires even after declaring bankruptcy.
What the wealthy own is assets, while those who aren’t wealthy lease assets. Owning real estate is tinkering with making money through inflation. If there is hyperinflation, cash devalues quickly and assets begin to surge.
Owning real estate also serves as a hedge against inflation. You would love inflation if you were to own a gold mine, oil field or a rental property. In an ideal situation, inflation will increase the price of your goods faster than the costs for the asset to operate. Once you calculate the difference, you will see that owning real estate can be a great way to generate income.
There are others who are under the false sense that certain pathways to financial freedom have to go through a credit card. This can lead to specific credit card troubles, but Pine Advisors can provide you with the assistance you need.
Another way to build up income is through investing in large-cap dividend companies. This is another form of investing that many novices may not have familiarized themselves with.
Dividend investing is when one invests in stocks that pay out dividends. These dividends are payments that are authorized by a board of directors of the company made to shareholders. This offers a unique chance to generate a great deal of income.
Buying stocks that pay you dividends over time will reward you immensely as long as you make intelligent decisions and adhere to guidelines. Those who are talented at dividend investing look for safety. This safety number is determined by the dividend coverage ratio.
For example, if a company were to earn $100 million and pays out around $30 million in dividends, it might be a safer bet if they were giving close to $90 million. Good dividend investors also focus on high yields, also known as a high dividend growth rate strategy.
You should get into dividend investing if you are looking for financial freedom because shareholders receive a lump sum for a share that you hold. The money can definitely add up over time.
Private Equity Investing
This is another great source of generating income. Private equity investing, with the right investments, can be a valuable tool for you. Liquid private investments come in the form of real estate funds, credit hedge funds, and private company funds. Usually, these investments will encompass a 3-10 year lockup periods.
The private companies are usually the least liquid of these potential investment opportunities. Since a lot of access to private investments are restricted to accredited investors specifically, investing in those companies specifically may not be feasible. However, there is a great deal of potential in the risk and return game.
Remember that when you are undergoing a private equity investing venture, you are investing for the long term. This means your investing acumen and access will be crucial. However, if you have proper access to capital, you could be gaining substantial returns to start.
Certificate of Deposit
Certificates of deposit are secure forms of time deposit where the money is required to stay in a bank for a specific period of time in order to earn a certain return. Usually, the longer the term, the higher the interest rate. Putting more money into a CD also has the potential to boost the annual percentage yield (the return on your deposit that comes from the accumulating yearly interest).
What makes a CD popular is that there is no minimum net worth or income required to start investing. Unlike other investments, which requires the investor to be accredited, there is no such standard here. Anyone can go to their bank and open up a CD of the desired duration. Further to this, a CD with a money market account is insured by the FDIC for up 20 $250,000 per individual and double that for a joint account.
CDs are ideal for savers who have the financial capacity to store away money for years on end. Many use credit cards as an alternative for financial needs, but it can quickly cause issues with interest rates. Consult Pine Advisors for valuable resources and guidance.