A very popular method to earn an extra income and build wealth is to invest capital.
Theoretically, this method should be employed only by those who can afford to invest
capital, because it brings long term lucrative returns.
Generally, the first question on everyone's lips is: How and where to invest capital?
Like every other business, in order to invest capital you must have capital and
the amount you choose to invest is directly related to the investment option you
have to choose. There is no general truth about how much capital should somebody
invest in order to earn money, this depends on every particular situation.
For example, if you want to invest capital in the property market, an initial investment
of 20 to 30 percent of the property's price will suffice. You can make the 10% down
payment and renovate the unit using the balance of the capital. Don't worry about
the remaining 90% or the property's price as a housing loan will cover that expense.
The amount of capital investment here is just a suggestion, as some people will
make do with just 10% while others will invest more in order to reduce loan tenure.
The best way to overcome the initial lack of capital for investments is to consistently
save money. But always remember to make a distinction between the rainy days fund
and the ones you put aside for capital investment, because in this line of business
it may take a while before you can actually enjoy the returns.
Never invest capital without having the slightest idea about the rules that apply
here. Before you take that step you should educate yourself about the particular
domain you are interested in, the investment tools available to you and the ways
to obtain the best returns. For example, if you have decided to invest capital in
the stock market, make sure you know the relevant regulations and the applicable
ratios; otherwise you might end up sinking money in bankrupt companies.
You have to be aware of the risk factors and the way that certain factors influence
the market prices. People that have a certain degree of knowledge about the market
and that invest capital wisely are less likely to be affected by inaccurate rumors.
Even though the investment in shares may be a quick way to wealth, the risks it
involves make it suitable only for people with and appetite for high stakes, due
to its volatility.
People that decide to invest capital in property need to work out their finances
before making a decision. Because property is not as liquid as stocks and bonds,
you have to make sure that the return exceeds the property's loan payment, otherwise
you will not be able to enjoy a good return.
In conclusion before deciding in which sector to invest, you have to be knowledgeable
in it otherwise the risk you will take will be great. It is advisable to find the
right professional to advise you about where is better to invest, the risks you
are taking and procedures of buying and selling that best suit your needs.