There are several ways to manage your own money. The first method is to put your money into a savings account and enjoy the small amount of interest you gain there. However, you can also make money trading bonds or stocks. It takes a little bit more time, but it promises a higher return!
Methods of trading
If you want to manage your money, you can put it into a savings account, but this isn’t where the real money lies. The interest on your savings doesn’t earn you profit due to inflation. Your money slowly becomes worthless if you put it away for a rainy day. Make your money work for you! There is a way to invest your money in governments and companies that gives you a nice return. This way of trading involves investing in stocks and bonds.
Speculating and earning money fast
When we’re talking about trading stock or bonds, the word ‘speculation’ is usually involved. This requires a little more explanation. Speculation is used when trading stocks or bonds to turn a quick profit. Investing, a word also frequently used, is usually right across from speculation. Investing suggests a more long-term approach to trading stock and bonds.
When you want to make a lot of money in the short-term, it’s best to open a free demo account with a broker. This way, you can start trading for short-term profits and you will learn how to recognize patterns. When you want to conduct long-term trading, it’s best to park your money in a securities account with a bank.
Investing in stocks
To enable growth and investment, companies need to use money. They can take this money from earlier profits or by selling shares. When the value of a company goes up, the value of its shares also increases. In exchange for purchasing shares, the company usually pays dividends to shareholders.
As a shareholder you are part-owner of the company.
Are bonds safe?
It’s also possible for companies to hand out bonds to attract money. It’s best to look at this as a loan taken with bondholders. The big difference between bonds and shares is that someone who buys bonds is not a partial owner of the company. Rather, they hold the company’s proof of debt. In conclusion, the bondholder loans money to a company in exchange for interest and a proof of debt.
Bonds are more certain—the interest payments are usually set in stone.
As a trader, you can multiply your capital with both stocks and bonds. With stocks, the shareholders are paid in dividends and with bonds, holders are paid with interest. However, there is another way to make money with stocks and bonds. By selling stocks or bonds you can make a lot of money. If you sell a stock or bond when it has become worth more than you paid for it, you’ll make money.