Many of us are in tough shape, financially speaking. It is little wonder that while stuck indoors and self-isolating, more and more people are looking to invest their savings. That is why you can see so many new stock investment adverts and apps, designed for the average Joe. It is also little wonder that this is occurring now, as more and more IPOs are making stock prices available to the average consumer. Tesla, Apple and other companies are dividing their stocks into smaller and smaller pieces, spreading the risk and providing more investment opportunities. Let’s go deeper into this to find out what other areas you could be investing in right now.
Indices are still safe
You need to know a few commonalities about index funds. They are passive investments, as they are long-term plans, with small profit margins. However, they are lower in cost and have a lower risk across the board compared to other investments like single stocks. Index funds are portfolios with lots of stocks merged into one ‘package’ that is then divided into more portions.
Index funds are great for the beginners because they are such broad investment strategies that it’s almost impossible to lose. Granted that the reason for this is, your money is spread so wide that making a profit is also usually going to occur in insignificant measures. However, you can invest in multiple index funds, use online investment calculators and see your rate of return (RoR). Just put in the month, day, year, the size of the investment and the withdrawals and then, it will let you know the profit and or loss of each year. The annual rate of return is calculated for you at the bottom.
Physical gold vs gold mines
Something happened this year that has never happened in the history of humankind. Gold shot up to all-time highs, with it shooting past $2,000 per troy ounce in the early part of the year. Considering that this means, if you invested in the precious metal at the end of last year, at around $1,300, you could have made over 50% in profit. However, should you as an average investor hold physical gold or should you rely upon gold mines, i.e. stock?
Gold Stocks
The average gold-stock price has gone from $20 to around $30-40. This is also in-line with the price of gold per troy ounce. However, since gold is also in direct competition with the world reserve currency, i.e. the USD, it can fluctuate in price. Therefore, as it has gone back down to $1,900 per troy ounce, now the stock price for gold miners has corrected. Barrick Gold is $27 and other smaller companies are under $10. Therefore, it depends on which miner you wish to invest in.
Physical gold
Many people believe the average Joe should hold what is called ‘real money’, which are gold bars or coins. You should consider holding your own gold bars, instead of paying a bullion company to keep it in their vault. Gold price has shifted up and down, but the new bottom is $1,900. The previous bottom a few months ago was $1,800-1850. It is recommended that you only hold physical gold if you are going to invest in the precious metal for the long-term.
Tesla
Perhaps the most amazing stock for 2020 has been Tesla. It has risen from $86.50 in January, to $424 at its current price. This means that it has exploded! This is unheard of in stock terms, almost nothing like this has happened before. Consequently, it has meant more and more average Joes want to get in quickly, before it is too late. The low has been $40, the average is £376 and the high has been $576.
Well, you should be careful because analysts are saying it’s currently a selling stock, not a buying stock. Inherently, this will mean that it’s not a bull run but a bearish stock. You wouldn’t think that considering its rise, but the rise has been somewhat dependent on the $3 trillion stimulus package the FED and US Senate have given to businesses. The correction is due soon, which is why you should wait for it, and then buy on the dip!
Investing in index funds is still the safest bet for beginners. Go this route if you want to be sure of making some profit year after year. However, you should also look into precious metals like gold and silver.