How to make more money: 7 investment ideas

Those seeking to make more money tend to do so in the form of an investment. Unfortunately, classic methods of investing such as opening a savings account or an instant access savings account no longer offer sufficient interest rates to be interesting for investors. So, these methods will soon become obsolete.

This article will explore seven alternative ways to achieve better returns on your investments and ultimately help you secure your retirement.

1. Stocks and funds

Securities allow investors to increase their capital with stocks and offer two different methods of investment: You can attempt to wait for an increase in market prices and then profit from selling your stocks at a higher price. However, this is a somewhat risky strategy given the unpredictability of stock market developments.

Dividend payouts can also earn you money. This refers to the process by which a stock corporation regularly distributes earnings to its investors. In the long term, you can also profit from compound interest accruing on the stock market. In this case, you are paid interest that you then immediately re-invest, leading to an increased interest payment in the next period. The new interest is then re-invested again, leading to exponential profit growth over time.

Instead of buying individual stocks, you can also look into equity funds as a method of investment. In this case, a fund manager will usually deal with securities trading on your behalf. There are two benefits to this approach: You can profit from your fund manager’s expertise while also diversifying your risk by acquiring a variety of stocks.

Fund managers do, however, often charge high fees for their services, which is why many investors prefer ETFs in order to avoid high overheads. ETFs are passively managed funds that track an index, e.g., the DAX. A limitation of this type of investment is that an investor’s personal values, such as climate protection and sustainability, are often not taken into account at all. This is because ETFs are not tailored to the requirements of an individual. They rather serve a wider group, meaning that investors will invest in a portfolio of companies that are assessed based on their economic prevalence alone.

With Inyova, investors have the option to partake in what is known as impact investing. Our platform offers you the opportunity to strategically buy stocks from companies with a positive and sustainable environmental hand and footprint. You also have the option to invest in promising stocks for your children.

2. Bonds

Those who want less of a risk and are comfortable with turning over slightly less profit may find that the solution to their investment needs lies within the world of bonds. Bonds are used by governments, companies, and banks as instruments to create funds. Investors receive interest in return and can potentially earn more money when the market rises.

Bond investments are made in the form of fixed-interest or “gilt-edged” securities with a fixed term. They are regarded as relatively safe and offer interest revenue as well as capital gains. However, the latter is only possible if you sell your bonds within the fixed term specified. Once this term has elapsed, you will only receive back the capital you invested plus the interest. 

Although this form of investing is deemed safe, total losses may still occur. If a company, government, or bank were to go into insolvency, for example, investors may lose part or all of the capital they had initially invested. As is the case with savings accounts, you should make sure that the rate of inflation is not higher than the projected rate of profitable interest when investing in bonds.

A quick word on sustainability: You have the opportunity to invest sustainably here as well — and a good option for a sustainable bond investment would be what is known as a green bond.

3. Property investments

Property investments are considered the go-to retirement provision. Property’s biggest advantage in comparison with other types of investment is that it does not decrease in value with inflation. This means that property investments will retain their value even in light of price increases. That being said, there is also the risk that the value is lost if the location of the property falls victim to deprecation. For this reason, you should note that the location is of utmost importance when deciding which property you want to devote your money to.

When investors invest in fast-growing regions, the demand for property tends to increase over time, which means that property values will increase as well, and so will the profit incurred from selling property. Investing in a property also means that you secure yourself a stable income if you decide to rent out the property. Depending on individual circumstances, it may also be beneficial to move into your property yourself in order to save the cost of rent in the future.

Property investment can be very profitable, but it is also important to note that one limitation of property investment is that it binds an investor to a cause. For example, landlords may need to take care of a whole host of tenants’ problems and also pay for any damages sustained during a rental period. Another potential issue could be the relatively high equity capital required to be able to purchase a property in the first place. An alternative to property investment could be to invest in property funds, which generally requires less starting capital and gives investors the option to handle their investments more flexibly.

A note on sustainability: There are also green building projects that you can invest in.

4. Gold

Gold has been crowned the no. 1 stable investment opportunity for centuries. Due to its scarcity, the supply of gold on the world market remains relatively stable. Procuring more gold is an arduous and costly task, so the amount of gold currently available is not likely to change drastically anytime soon. 

However, those looking to increase their capital quickly should not put all of their eggs into this one golden basket. This is because gold is not really an income-generating asset. Investors can only really profit from gold investments if, for example, a crisis were to lead to rate changes on the stock market. Many investors rely on gold when a country’s currency depreciates, leading to an increase in the market value of gold due to increased demand.

Gold is incredibly bad for the environment, which is why it is not at all suitable for environmentally conscious investors. The work that takes place in gold mines damages the environment and is detrimental to workers. According to environmental organisations, working conditions in gold mines are often catastrophic.

5. Stock certificates

Besides physical stocks, stock certificates also offer a way to participate in the stock market. You can invest in either rising or falling prices, and there are different certificates available for different market activities.

This form of investment is known as a “bearer bond”, which means that investors in possession of a certificate do not “own” the bond as they would stocks, but they are rather entitled to repayment of a certain amount or a security. Stock certificates are issued for currencies, bonds, or stocks and are also available for things such as raw materials and investment funds.

This form of investment is not always suitable for beginners, because it lacks standardisation in comparison to stock investments. You should be aware of potential traps when it comes to making an investment. Stock certificates may also bear high levels of risk due to their reliance on increasing market values which, for the most part, can be difficult to predict.

Apart from their complexity, stock certificates also bear a so-called issuer risk as they are issued by banks. If the bank went bankrupt, you would lose all previously invested capital.

ESG certificates are great for investors who would like to make a sustainable investment, although uniform criteria and sustainability standards are yet to be defined. For this reason, truly sustainable investing could be quite difficult in this field.

6. Crowd investing

Crowd investing allows investors to invest relatively small amounts in young companies and startups. Crowd investing means that several people come together to invest in a project as a collective. Besides investing in companies, property investment is also an option within this domain.

If you would like to earn more money by means of crowdfunding, you have two options. The first option comes in the form of profit-related disbursements, and the second option in the form of fixed interest rates.

Investors participate in a project proportionately. Crowdfunding allows you to invest and  increase your capital with high returns. For instance, the average interest incurred for property investments is about 9%. All types of crowd investing, however, bear a heightened risk, since the danger of a total loss is higher than for other investment forms.

Crowd investing allows investors to invest sustainably, and there are a host of companies specialising in environmental projects to choose from. One platform to check out is Greenvesting.

7. Cryptocurrencies

Cryptocurrencies such as Bitcoin and Ethereum can be good investment opportunities with high returns. Digital currencies can be incredibly successful, yet they also bear potential risks. 

One example is the lack of investor protection, digital currencies not being subject to the same government regulations as physical currencies. They are also highly volatile, and government attempts at regulating digital currencies may lead to investors becoming nervous and withdrawing billions of euros from the crypto market within a short time.

Another aspect to consider is price manipulation, which is not unheard of in this domain. Theft and criminal activity are also rife, and this is an important issue to consider before investing. Digital currencies are extremely susceptible to cyberattacks – take, for example, the biggest raid on the crypto market that took place back in 2017: Hackers made off with USD 500 million from the Coincheck crypto exchange.

Cryptocurrencies can be suitable for environmentally conscious investors. Although producing cryptocurrencies – except for those that are not based on mining, such as IOTA – consumes a lot of electricity and leaves behind a large carbon footprint, speculating on cryptocurrencies doesn’t directly require any electricity, which is why cryptocurrencies can form part of your portfolio strategy.

Summary

There are different forms of investment that may be more or less eligible depending on your investment goals and your propensity to take risks. In general, you should consider long-term effects when it comes to your investments, in order to profit from compound interest, and have the patience to sit out market fluctuations.

You should also try to diversify your portfolio as much as possible to avoid losing all of your invested capital at once. Portfolios can be established independently by investing in different stocks and material assets or by investing in property and share funds that already consist of diverse assets.

Some newer investment methods such as crowd investing and cryptocurrencies promise high returns for those who want to invest and earn money quickly. However, these types of quick investing do bear particular risks due to the potential of total losses that can be sustained along the way.

While stocks, certificates, crowd investing, property investments, and bonds may, under certain circumstances, be fairly sustainable and environmentally friendly forms of investment, the same cannot be said for gold. Cryptocurrencies can also form part of an environmentally friendly portfolio strategy, depending on the product.

Are you interested in investing sustainably? Create your free, non-binding investment strategy now!