What can you invest in? 11 possibilities

Investing Basics

Investing is a smart way to grow your wealth. But what can you invest in? The choice of different investment possibilities is huge. From stocks to other financial instruments. In this module, you will discover what you can invest in. Spoiler alert: there are 11 possibilities. Let’s start the module.

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Investing money for beginners: 3 investment options at BUX

If you are just starting to invest, it can all seem a bit overwhelming. You might be wondering: what can I invest in? Don’t panic, we are here to help. At BUX, for example, you have access to three investment options: (fractional) stocks, ETFs, and ETCs. Let’s look at these ways of investing.

1. Investing in stocks

One of the most popular ways of investing money is (fractional) stocks. When you buy a stock, you become a co-owner of a small piece of a publicly traded company, like those on the Amsterdam Exchange Index (AEX). If the company makes a profit and the stocks rise in value, you benefit in the form of capital gains or dividend. Additionally, you can participate in shareholder meetings. The more stocks you own, the greater your influence and voting rights.

2. Investing in ETFs

An Exchange Traded Fund (ETF) is an index fund that is traded on the stock exchange. Instead of investing in a single company, with a single ETF you invest in a whole group of companies – sometimes dozens or hundreds at once. It is a basket filled with various investment products, such as stocks, bonds, or ETCs. Thanks to the broad spread, transaction costs remain low, and you build a diversified portfolio.

3. Investing in ETCs

An Exchange Traded Commodity (ETC) is an investment product that tracks the price of one or more commodities, such as gold, silver, or oil. With this, you can invest in various commodities without physically owning them. The value of the ETC changes along with the price fluctuations of the commodities you have invested in. It is important to know that an ETC is a debt security, which means you are lending money to a company, rather than becoming a co-owner.

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What to invest in: other investment options

Besides the investment options above, there are many other ways in which you can invest. Below you will find an overview of some other investment possibilities you can consider.

4. Savings account

A savings account is one of the simplest and safest ways to keep your money. You put a self-chosen amount into a savings account and receive variable interest on your savings. Saving does not offer a high return. Certainly not with the falling interest rates and high inflation of recent years.

5. Bonds

Bonds are loans that you grant to a company or the government in exchange for (fixed) interest and the borrowed amount. But you can also earn money by selling the bond for a higher purchase price. The return is lower than with stocks, but the risk is usually smaller too.

6. Funds

Mutual funds collect money from various investors so that a fund manager can invest in a mix of investment products. This can range from various stocks to bonds, ensuring a diverse portfolio. A fund manager tries to ‘beat’ the products of these actively managed funds in the basket. There are also funds that invest passively.

7. Options

Options are financial contracts that give you as a buyer the right, but not the obligation, to buy or sell an underlying asset – such as stocks – at a set price within a certain period. There are two types of options: call options (buying) and put options (selling). They are often used for speculation or risk management.

8. Real estate (property)

Investing in real estate means buying property like a home or commercial building with the aim of generating passive income. This can be done via rent and the appreciation of the building’s value over the long term. You can also invest in real estate via a real estate fund where you receive a share of the net rental income.

9. Collectibles

Besides real estate, you can also make investments in collectibles. These are physical items, such as art, coins, antiques, or rare books, that you can collect and trade. The idea is to invest in objects that can increase in value as they become rarer or more sought after.

10. Crypto

Crypto refers to digital currencies, such as Bitcoin and Ethereum, which use so-called blockchain technology to make transactions secure and transparent. Cryptocurrencies are managed decentrally, meaning they are not dependent on central banks. Via staking, you can earn a type of interest.

11. Private equity

Private equity involves investing in non-publicly traded companies via a fund. Think of start-ups. These companies are often not publicly traded but can experience significant growth with the right strategic decision-making and operational improvements. Over time, you can sell your stake for an attractive return.

What is the best to invest in for a good return?

Now that you have got to know the different options, you might want to know what is best to invest in for a good return. There is no right or wrong answer to that. With every form of investing, you can build a return and run a risk. Furthermore, past performance is no guarantee of future results. Below you will find a few considerations that can help you.

Risk: When choosing where you want to invest, it is important to consider the risk that suits your financial situation. Some investments can offer high returns, but they also carry a greater risk. Other options are safer but also offer lower returns.
Diversification: Diversification is important to lower your risk of large losses. Instead of putting all your capital into one type of investment, you can spread the money across different investment products. This ensures a diverse portfolio and increases your chances of a stable return in the long term.
Knowledge: An important factor when choosing the right investment is the knowledge you have of the market. A beginning investor might consider investing in easier-to-understand products like ETFs. If you have more knowledge, you could choose stocks, for example.
Time horizon: If you want to invest with a long investment horizon, riskier investments like stocks or real estate can be a good investment. For short-term goals, it might be better to choose safer options like bonds or a savings account.

Are you ready to learn more? Head quickly to the next module.

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Investing involves risks. You can lose your investment.

All views, opinions, and analyses in this article should not be read as personal investment advice. Individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.