And for our final entry, we come to stocks, the OG, street-cred granting investment.
Simply put, stocks or shares represent an ownership stake in a company, and are traded via the stock exchange. You earn money by making capital gains, which is when you sell your stock at a higher price than when you bought it.
Sounds easy, but how do you know when your stocks will go up? And how high? Trying to follow the roller-coaster trajectory of a typical trading day is nothing if not nerve wrecking.
Another barrier to entry: Stocks typically are traded in lots of 100, so trying to invest in a high-performing stock, like Apple Inc, for example, (USD$123.24 per stock at the time of writing) can incur a high initial outlay.
Alternatively, you can invest in stocks that give you dividend returns, which can help you form a passive income stream.
How to use for optimal gains
Although trying to pick winning stocks can be difficult, stocks can be useful for many purposes.
For example, a collection of stocks in fast-growing fintech startups can provide impressive short-term gains. On the flipside, investing in time-proven stocks can act as a counterbalance in a commodities-heavy portfolio.
Subscribing to expert stock tips, or learning from professional traders can increase your chances at success, but there’s no substitute for hard-won experience, finely honed instinct and sometimes, pure dumb luck.
Text: Alevin Chan/SingSaver
SingSaver is a personal finance comparison platform that allows users to easily compare credit cards, personal loans, and insurance for free while helping empower people to lead healthier financial lives through increased financial literacy.
