Many individuals appear to be living their dream life. When you look at their social media feed, it is full of descriptions of travel and entertainment.
Have you ever wondered what some of these people do to achieve such financial freedom? Not everyone is a celebrity in the fields of sports, entertainment, or social media, so why are so many people able to devote so much of their life to activities outside of a 9-to-5 job?
The answer in many cases is investing. You may fear that you have to have money to make money. To some extent, this is undeniably true, but there are many ways to start making money now that don’t require a substantial amount of start-up capital.
What are Stocks?
Stocks represent the value of a company. When you purchase stock in a company, you are essentially buying a fraction of the ownership of that business. In order for people to purchase partial ownership of a firm in this way, the operation has to be publicly traded.
Less than 1% of businesses are publicly traded. But because more than 27 million businesses exist in the United States alone, that one percent has a significant impact on the economy, though it is not the only driving factor of a healthy economy.
By purchasing the appropriate stocks and waiting for inflation and the company to grow over time, your initial money investment will also expand. This is how you make money in the stock exchange, by betting on companies and their future success.
Why Invest in Stocks?
Although you definitely need money to invest in stocks up front, you can get started right away by making a couple of key small investments. Quite a few individuals may have begun with a small investment of as little as $10, but were able to expand their initial investment over time.
The average long-term return on investment (ROI) for stocks is 10%. This fluctuates with the market, of course, so it should ideally be treated as a long-term investment.
In comparison, simply leaving your money in a savings account renders an average return of just .23%. Keeping a certain amount of money in savings is wise, especially for emergencies, but leaving all your resources in a savings account does not enlarge your wealth.
How Do You Invest in Real Estate?
Another form of investing that can yield a high return is real estate. Residential properties average an ROI of 10.6%, with commercial properties achieving a return of 9.5%, and Real Estate Investment Trusts (REIT) averaging 11.8%.
Investing in real estate is done in a variety of different ways. To foster your purchasing ability and make larger investments, you can begin by wholesaling a property.
A wholesale property involves buying a home for below market value from a distressed buyer and selling that contract of sale to another individual. That individual then takes the property and rehabs it.
Once the rehab is complete, the current owner sells it for a profit or rents it out, which would continue to pay money every month.
The ultimate goal in the real estate investing arena is to be the bigger investor who’s able to rehab a structure, sell it for profit, or add it to their property rental portfolio. The rental portfolio then helps to provide the investor with monthly rents that are managed by a reputable property management company.
How Do You Enlarge Your Investments?
Investing in stocks and real estate can be risky, especially in a volatile economy. This is why we recommend that investors use this strategy as a means to increase wealth over at least a 2- to 5-year period.
The sooner you can start investing, the more money you will be able to accumulate over time. Investments should play a vital role in planning and saving for retirement.
Placing your money in stocks naturally yields a long term gain. While investing in real estate can help to create a monthly paycheck for you every month.
Conclusion
You can begin to invest in your dream life now, and eventually walk away from your 9-to-5 job in pursuit of your dreams. By investing smartly in stocks and real estate, you can begin to amass your wealth and arrive at financial freedom.
