Ancient civilizations such as Babylon already spoke of the so-called “Law of gold” where it was indicated that if you put the money that came to you into good projects, it would end up returning in larger quantities. At that time, the money was placed in goods, commodities, or even businesses to make a profit.
Today that law has not changed, but it has come to be known by a different term: Investment. Investing allows you to place capital in different options and thereby earn both passive profits by owning it and additional money by selling those goods at a higher price.
However, the means of investment are quite varied, and many people do not have a complete concept of how they work. From investing in company shares to buying and selling gold, each one has its means of generating money that varies according to how we use it.
But given that, it is normal that we find the question: What is the best option to invest? And with that in mind, we have decided to do some research. In this article, you will learn about the advantages and disadvantages of some popular investment vehicles so that you can choose the one that best suits your needs.
Gold: The king of stability
Gold, whether in jewelry or pure gold, is one of the metals associated with wealth and luxury. Its purchase and sale have generated dividends since ancient times, and its value as a precious metal is still quoted today. Therefore, it is not at all surprising that it is considered one of the best investment methods.
Gold has both advantages and disadvantages, so we will make a list so you can compare them in a better way:
Pros
- Gold is extremely stable, which means that in the event of losses, they are always minimal.
- Its value is linked to its demand, so it is not affected by stock market falls and tends to revalue in periods of high inflation.
- It has high liquidity, so there are no problems when exchanging it into any currency.
- It is highly demanded in the industrial and jewelry market.
Cons
- It does not generate passive income, and the profit we can obtain from it is only based on the difference between buying and selling.
- It tends to depreciate in case the dollar remains strong in the market.
- Since it is a highly stable asset, it is difficult for its price to rise significantly in the market.
- It is a type of investment that is highly recommended to safeguard capital or for savings due to its very low volatility.
Stock market: Wise investments with great results
The stock market has multiple forms of investment, but in general, it involves the purchase of shares that represent percentages of certain companies. The value of these shares rises or falls depending on the state of the company and, consequently, we will make a profit when we sell them.
However, one of the biggest advantages of stocks is that several companies pay dividends from their production to their shareholders. This makes it one of the best types of investment in existence.
However, for better comparison, here are its characteristics:
Pros
- Some stocks generate passive income constantly.
- Good market research can lead to huge profits.
- Stock prices are anchored to company performance and can go up a lot if the company is efficient.
- The market rises or falls gradually, giving time to react.
Cons
- It takes a lot of experience to be able to make good decisions in the stock market or else you can lose a lot of money.
- It is susceptible to unexpected crashes, causing it to lose a lot of value in some cases.
- If companies go bankrupt, the stock becomes worth very little.
- Its price is affected by many global economic conditions.
Cryptocurrency: The kind of investment for the quick-witted
One of the most recent investment models and the one that has best permeated today’s society, is crypto assets or cryptocurrencies. In this model, capital is exchanged for a virtual currency, which is revalued depending on its demand or use.
This asset is quite popular among the new generations, and besides being a good type of investment, it is also viable as a currency to trade: this saves the fact of having to exchange it for money when doing various businesses.
Although cryptocurrencies have many benefits, they also have several shortcomings that balance their usefulness as a means of investment.
Pros
- They can be purchased immediately through various trusted websites. They cannot be counterfeited and are quite secure.
- Transactions with them have no intermediaries. This makes them an ideal asset to trade without paying additional bank taxes.
- They are volatile: a good investment can generate thousands of dollars of profit in a jiffy.
- They can be used as a currency without the need to be exchanged.
Cons
- The market changes in a matter of seconds, leaving very little time to react to declines.
- Not all currencies have good liquidity
- Some computer knowledge is needed to work effectively with them.
- They are susceptible to scams
What other types of investments can we find?
In addition to the three we have presented here, there are also many options for different types of people. Each one seeks to adapt to the style of each person and their way of managing their economy.
The purchase of futures contracts allows you to trade commodities depending on their movement in the market in exchange for a small commission from the intermediaries, as well as investments in real estate that can go up or down depending on their situation and state.
Other metals also enter the list: iron, steel, aluminum, and even silver investments that behave similarly to gold. The truth is that each investment has its pros and cons, leaving it to our complete analysis to determine whether they are viable or not. We just have to sit down and evaluate what we expect to obtain from our capital and then choose the type of investment that best suits us.
