[ad_1]
Bitcoin is not a new concept, but it is attracting renewed interest from investors.
Over the past year, the price of bitcoin has skyrocketed to 350% and is currently trading around 275% higher. However, it is also an extremely volatile commodity, and its price has seen dramatic highs and lows in recent weeks.
It’s tempting to try and capitalize on the bitcoin hype, but it can be risky. While some investors are optimistic about the future of cryptocurrency, others say it is experiencing a bubble and that it is only a matter of time before the bubble bursts. If you buy and sell at the right time, you could earn serious money. But more than likely, you could burn yourself out and potentially lose a substantial amount of money.
Instead of throwing your hard-earned money into Bitcoin, you might want to consider opting for one of these safer – but still rewarding – investment options.
Image source: Getty Images.
1. Index funds
Index funds are large collections of stocks that track a particular stock index, such as Dow Jones Industrial Average or the S&P 500. They may not be as exciting as high-end investments like bitcoin, but they are one of the most stable and reliable investment options available.
Since index funds follow the market, you are almost guaranteed to see positive returns over time. Of course, nothing is ever really guaranteed in the investment world. But historically, the S&P 500 has averaged returns of around 10% per year since its inception. And when the market itself is doing well, your index funds will perform as well.
The downside to index funds is that they are just plain average. They follow the market, which means it is impossible for them to outperform the market. For some investors, it’s a dealbreaker. However, even if they don’t experience any extravagant short-term gains, they make up for that with their consistent long-term stability and growth.
2. ETF
Exchange-traded funds, or ETFs, are similar to index funds in that they are collections of stocks bundled together into a single investment. The biggest difference is that ETFs can be traded throughout the day like stocks.
ETFs also have more flexibility than index funds. Since index funds reflect the indices they track, you cannot choose which stocks are included in the fund. While you might not necessarily be able to choose which stocks are included in an ETF either, there is a greater variety of ETFs that follow different industries or segments of industries.
For example, you can invest in a broad market index ETF, which is very similar to an index fund. Or you can invest in a more specialized ETF that tracks a certain industry, like the healthcare industry or the tech industry. If you invest in a tech ETF, for example, all stocks in the fund will be tech stocks. This allows you to limit your risk by diversifying your investments, while focusing on a sector or segment that interests you.
3. Fractional shares
If you prefer to invest in individual stocks rather than funds, fractional stocks allow you to invest in particular stocks without breaking the bank.
Fractional stocks are small slices of a single share of stocks. When buying fractional shares, you can invest in companies that might have high stock prices per share while spending only a few dollars. Of course, you won’t see as many returns as if you had bought whole stocks (although your fractional share will change in value by the same percentages), but you also aren’t risking that much money.
Not all companies allow fractional shares and not all trading platforms allow fractional share trading, so keep this in mind when deciding which investment strategy is right for you. But if you’re eager to invest in a particular stock without spending an arm and a leg, fractional stocks may be a wise option.
Smart investment
Bitcoin may grab the headlines, but that doesn’t necessarily mean it’s a smart investment. Rather than putting all of your money into one risky investment, try to diversify your portfolio and invest in stocks that are more likely to perform well over the long term. By focusing on the long term, you can avoid getting caught up in potentially risky investments.
[ad_2]
Source link