How does money work in the modern world

For a long time, most people thought that investing is only for those who work on Wall Street. They avoid making investments because they’re scared of losing their money. Fortunately, the interest in investing has been growing from day to day. People understand that by working for a salary, they won’t be able to live the life they dream about. 

It’s impossible to say that investing is simple and will bring you a fortune. But you can always find help to choose the right way to invest your funds and get additional income. 

Tips for newbie investors

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Every dollar needs to have a purpose. Follow the 30/30/30 rule: spend 30% of your income for everyday life (food, transport, rent, etc.), keep 30% in a savings account, and invest 30%. You may ask, where should I put the rest of 10%? It’s up to you. 

To choose a suitable way to invest your funds, you should answer three key questions:

  1. How much knowledge do you already have?
  2. How much time do you have to learn how to invest?
  3. How much time do you have to spend on dealing with my investments? 

The first answer will help you to understand whether you should start with basic investment options that are mostly controlled by an institution or an advisor. If you already have plenty of knowledge, you can move to something more complicated where you will have more responsibility for your actions. 

The second answer will depend on the first one. If you don’t know anything about investing, you will have to spend hours before putting your funds in any of the investment options. It’s vital to know the advantages and pitfalls of each type. 

Remember that investing always requires time, patience, and desire. If you don’t consider investing as your passion, it’s unlikely you will want to spend lots of time learning how to make your funds work. Thus, the answer to the second question will help you find the simplest investment option. 

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The third answer will show whether you are a passive or active investor. Passive investing allows maximizing profits by limiting purchases and sales. You can get moderate returns, but you don’t have to spend lots of time researching and reinvesting. Your funds will work in the long run. Active investing means you need to research and reinvest constantly. For this, you may be awarded higher returns. There is no right approach to investing. So, this question will help you to pick out the options that suit your lifestyle. 

5 ways to invest your funds: passive investing 

After you answer the three questions, you can start learning the ways to invest funds. Below,  the most reliable options for passive investing are listed. 

1. Insurance plan

It’s unlikely you expected to see insurance in the list of investment options. However, even by insuring your life, you can get additional income. There is a unit linked insurance plan (ULIP). It provides insurance coverage and investment in equities and bonds. When using the plan, you will need to pay regular premiums as a policyholder. Part of the funds will go to your insurance, and the rest will be combined with assets of other policyholders and invested in equities, bonds, or a combination of both. 

2. Real estate

Most readers might have skipped this part because they believe that investing in real estate is only for rich people. But if you are reading this, you will know something interesting about the real estate investing option. 

Of course, if you want to buy an apartment and rent it out, you will need lots of money. No matter what country you live in, apartments cost a lot. Moreover, you will have additional expenses for taxes, cleaning, etc. 

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However, there is another way to invest in the real estate market — crowdfunding. It allows you to own fractional shares of a commercial property. Although it still requires significant investments and bears risks, they are lower than if you would buy the whole apartment yourself. Moreover, you don’t have to maintain the property; even the paperwork isn’t your headache. You share costs and risks with other investors. 

3. Bank account 

Banks also allow their customers to invest funds for future incomes. You can open a bank account and receive annual interest on your funds. Usually, such an account has requirements regarding the minimum amount, withdrawals, and duration. The annual interest is never high. However, you don’t spend any time on learning or reinvesting. Your funds work while you sleep. 

4. Retirement plan

This type of investing should be mentioned even if you believe you are still too young to think about retirement. Some employers offer retirement plans that allow you to begin with tiny amounts. The funds contributed to the plan are taken from your salary, so it lowers the taxable income. Your employer can invest them in various financial instruments of your choice. Mostly, it’s mutual funds. 

5. Mutual funds

A mutual fund opens access to professionally managed portfolios of different securities to beginners and investors with limited funds. It is maintained by professional money managers. The fund pools assets of several investors and puts them in financial instruments, including equities, bonds, and currencies. Each investor bears losses and receives rewards proportionally to the amount invested. 

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Top ways to invest your funds: active investing 

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If you are ready to study hard and spend lots of time on investing, the active investing approach is for you. You will operate as a portfolio manager. It means you should know when to purchase or sell an asset to maximize your income. Active investing is mostly done through financial markets. There are numerous financial instruments you can invest in, including stocks and shares, bonds, currencies, cryptocurrencies, indices, commodities, and ETFs. 

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Also, there are several ways to invest in each financial instrument. You can open a brokerage account and forecast the price direction of instruments available on the platform. You can also purchase a real asset, such as a share in a company or a bond. You will also need to open a brokerage account that will allow you to purchase real assets. 


There are many ways to make your money work. Before you invest your funds, you should be sure to do plenty of research. Every investment option has advantages and drawbacks. Pay greater attention to pitfalls, as they may lead to higher losses. Remember that any investment bears risks. The size of them depends on your skills and knowledge. 

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