Last updated on November 29th, 2022
When talking to others about building funds for their business, I find that a lot of people want to use investing to make their money grow quickly. They have heard that investing equals profit and so, they believe that investing is a way to ‘get rich quick’.
However, anyone with experience in investing will tell you that this is not the case – at least, not without a ton of risks.
As a lot of people have asked me recently how they can use investments to quickly grow their money without any losses, I’ve pulled together this article to discuss the topic.
Disclaimer: I am not an investment advisor, and in my finance-related articles, I won’t be giving any investment advice. Here, I am just discussing my personal approach to investing.
Why Fast Investment Can Lead To Bankruptcy
Over the years, I have found that a surprising number of people think that investing is a fast way to earn money through doing nothing – but this isn’t true. In fact, there is nothing ‘fast’ about investing.
Investing works by purchasing an asset at a low price and then later selling it for a higher price. Short-term investing is when investors try to buy and sell their assets in under a year, hoping to make a profit, but this is extremely risky.
To make short-term investments, you need to speculate a lot and take risks – lots of them! This can result in more losses than gains due to high costs, higher taxes, and inflation eating into your gains.
For example, a study by Schroders found that investing in the S&P 500 for only a month results in 40% of investments losing money.
In twelve months, 30% of investors lose money. Over five years, this drops again to 20% and by the ten year mark, the rate of loss is down to 10%.
So, there is no ‘fast’ and safe way to grow money through investing. It is proven that long-term investing is less risky than investing for the short-term (and by short, I mean between three months and a year).
If you keep making short-term investments, hoping for a big payout in a short period of time, then you are inching yourself closer and closer to bankruptcy. This is because investors have a bad track record when it comes to timing the market.
My Approach To Investing
My personal approach to investing is to aim for long-term investing.
Long-term investments are actually proven to produce better results than short-term investments. For example, between 1928 and 2021, the S&P 500 had an average return rate of 11.82%.
The return rate for three month T-bills was 3.33%. Holding onto long-term investments also allows investors to ride out lows in the market to see a better long-term performance overall.
When it comes to stocks and long-term investing, I usually opt for two solutions – ETFs and REITs.
Exchange Traded Fund (ETF)
The first of my primary investment solutions is Exchange Traded Funds, or ETF for short.
They are considered to be a mixture between an index mutual fund and a stock. They represent a ‘basket’ (a collection of securities with similar themes or criteria) of stocks or bonds.
Although they share this in common with mutual bonds, ETFs are bought and sold like stocks and don’t require any substantial ongoing management fees. There are several types of ETFs out there, including:
- Equity ETF – These ETFs track the equities of businesses (large and small) or stocks in specific industries, sectors, and countries.
- Bond ETF – Also known as Fixed Income ETFs, they provide a steady income over a set amount of time.
- Currency ETF – These ETFs invest in currencies.
ETFs offer a range of benefits to investors, and this has helped make them more attractive in recent years. Over the years, the number of ETFs in the United States has increased.
So, what benefits do ETFs offer?
Firstly, ETFs offer low investment costs. This means that ETFs cost less to manage and investors can expect a higher return as a result.
According to a 2020 survey, 60% of respondents stated that low investment costs were the most important attribute of ETFs.
This means that many investors consider this benefit to be the best thing about ETFs – and so do I.
But ETFs also offer other benefits such as diversification and their ability to be traded like stock.
Because they create and redeem shares through transactions that are not considered sales, ETFs have a more favorable tax treatment than mutual funds when they are sold.
This again means you get to pocket more of the return. On top of that, long-term capital gains are taxed at a lower rate than regular income in the US, so you pay less in tax for holding an ETF for longer.
All of these factors make ETFs low-risk investments, especially because they have low management costs and improve the diversification of your investment portfolio.
Real Estate Investment Trust (REIT)
My second investment solution is Real Estate investment Trusts, or REITs.
A REIT is a company that invests in income-producing real estate and basically allows pretty much anyone to invest in real estate.
This is because investors who want to invest in real estate but can’t due to high costs, still can do so by investing in a share of the real estate.
The cost is shared among several investors and each investor still earns dividends but without the responsibilities of a landlord.
There are three main types of REITs. These are:
- Equity REITs – These own and manage real estate and generate revenue usually through rent.
- Mortgage REITs – These lend owners money through mortgages and earn revenue through the net interest margin.
- Hybrid REITs – These are REITs which use the strategies of both equity and mortgage REITs.
These REITs can be further broken down depending on what type of property and real estate they invest in.
This means they give investors the option of a steady income over long periods of time.
They are an affordable way to diversify your investment portfolio and allow people to invest in real estate for lower costs, thus reducing their risks.
Different methods of investing which you can try out
Each is relatively low risk so take a look at the options I would recommend and find the best investments for you.
1. Corporate Bonds
Corporations can issue a lot of different bonds which range from risky to safe.
Although there are some risks to them no matter what (the company could fail to make its promise, or the bond value can vary widely due to changes in interest rates), they are still safer than stocks.
2. Series I Savings Bonds
Series I savings bonds are a relatively low-risk type of bond you can invest in as it is backed by the US government.
It adjusts for inflations automatically, meaning that this again reduces your risk of losing money.
So, if inflation rates are on your mind and this concern is holding you back from investing, then a Series I savings bond could be the answer.
3. Money Market Funds
A money market fund has its benefits, such as being able to take out your funds at any time you desire without being penalized for it.
If it’s ‘‘fast’ money you want, a money market fund is definitely one to try out – plus they are low risk!
4. Short Term Certificates Of Deposit (CD)
One of the best ways to safely invest is to use a certificate of deposit (otherwise known as CDs), but some CDs can lock you in for a long period of time and miss out on some great rates.
To combat this, I’d recommend you get a short term CDs.
They stop you from being locked in for too long, and you get all the safety of a typical CD – all you need is a larger deposit so you can benefit from those high interest rates.
5. US Treasury Bills
The US Treasury also offers a range of bonds you can invest in, along with bills, notes, and inflation-protected securities (also known as TIPS).
Each one has a different period of time before they mature and the shortest one is US Treasury bills.
For some people, a year is too long – but you typically won’t lose any money if you let the bill mature and so it’s a super low risk of loss.
6. Dividend Paying Stocks
Dividend-paying stocks are a lower-risk investment when compared to most other kinds of stocks out there as they pay cash dividends.
They do fluctuate in line with the market but tend not to fall as hard, which makes them less risky and safer than other forms of stocks.
7. Money Market Account
Money market accounts are very similar to your regular savings account, with a debit card and interest payments, but a key difference is that the rates are typically higher than a savings account.
So, investing a lot of money in one of these will help you rake in higher interest rates than if you used a regular savings account.
8. Fixed Annuities
Fixed annuities are great because they provide you with both a guaranteed income and return.
As a result, you have better financial security – but fixed annuities are very complex and tricky to handle, so only give this type of investment a go if you are familiar with tearing contracts apart.
9. Crowdfunded Real Estate
Real estate is a great source of investment but a lot of people struggle to meet the high amounts of money it takes to own property.
This is where crowdfunded real estate comes in – you and several other investors all can put together what you have and in return, you get a piece of property that you could have dreamed of accessing.
All you need to do is find a real estate investing platform that offers this form of investment and check out their return rates to see how much you can make.
10. Real Estate Debts
By investing in real estate debt, you are effectively becoming the lender to a property owner.
The money you earn is off the fixed rate of return and these rates can be pretty attractive – but you need to have patience while the lender pays back their ‘loan’.
11. Mutual Funds
Mutual funds are a great way to generate a passive income for yourself and although the initial daily returns may not be to your liking, these do build up over time to help you earn a sizable amount.
The longer you do hold on to this kind of investment, the better – but at least you can start earning immediately, although not a huge amount.
12. Small Businesses
Investing in small business can help you make between 10% to 25% annual returns, and small businesses are a lot less risky than you may initially think.
A majority of small businesses make it through their first few years of business – so you can invest now, reap the rewards, and get out if you don’t think this company has much of a future left.
Investing in cryptocurrency will definitely can get you some fast money as different cryptocurrencies are known for fluctuating madly.
However, their popularity in recent years has seen a huge surge in daily rates so even investing a little now could get you a massive return (or loss) in the end.
The key here is timing – so try investing a little and cross your fingers.
14. Retirement Accounts
This option focuses more on the safe element of investing rather than the fast but retirement accounts are a great way to save money now and be rewarded with more in the future.
They also have a lot of tax advantages so you can keep more of your own money while still investing and receiving interest.
15. Real Estate
I touched on real estate debts earlier but I also want to stress how investing in real estate itself is also a great way to make fast money and safely.
Property values have only increased in recent years but you don’t have to immediately sell your property once you’ve bought it.
Using your property as a rental (either for vacations, or as a rental home) is a great way to earn money.
Your mortgage is covered every month, and you can sell off the property once it’s paid off!
16. Index Funds
Another similar type of fund to an ETF is an Index fund. The difference is that index funds are purchased at market close while ETFs can be purchased throughout the day.
Despite this, index funds are low risk but also have low rates that take a while to build to a more satisfactory amount.
17. Growth Stocks
Growth stocks are basically individual stocks which are in the growing stage of their cycle.
This means that they are growing at a fast rate and a great way for you to see a huge increase in value in just a short time.
18. Savings Account
I mentioned earlier how a money market account is like a savings account but better, but a savings account is also a safe way to grow money.
If you find a savings account with a high yield, then your money can just multiply itself by sitting safely in an account.
19. P2P Lending
P2P (person to person) lending allows you to lend your money to others and receive an interest on it in a very short period of time.
This is because the length of loans in P2P lending can range from daily to annually – but if you can lend on a short loan, then you will see the rewards very quickly.
20. Micro Investing Apps
They say there’s an app for everything and now, there’s micro-investing apps which allow you to make a few extra dollars every day by investing.
This kind of investing may seem trivial at first but over time, it definitely builds up and allows you to make some serious money.
21. Start A Side Hustle
You don’t need to start a new business with the hopes of growing it into something large.
You can just start a small side hustle to help earn money while working odd hours or doing the things you already love doing.
For example, I know people who make a little money on the side by selling their crafts or someone who offers to power wash things (rugs, driveways, etc.) by using their power washer and charging for the chore.
This final idea may seem strange but trust me, investing in yourself is a great way to make more money.
The idea of ‘investing’ in yourself means that you take the time and funds to help improve your skills. For example, I decided to take artificial intelligence classes, because I believe in AI future.
This will help make you more employable so you can apply for higher paying jobs – and earn more every year!
So, there is no ‘fast’ when it comes to investing. It’s a long process even for short-term investing, and then you are more likely to bankrupt yourself than you are to make a gain.
However, the opposite is true for long-term investing which is why I personally choose ETFs and REITs as my investment solutions (see also, ‘What is White Label Solution?‘).
Of course, if you want to make money quickly, then investing in side-hustles or small businesses is an option – but whether or not you should do this comes down to your specific financial position.
Ultimately, I am not advising you to invest in any of these. I am just stating that if you are looking for fast ways to make a gain on an investment, you will more likely make a loss due to the way investing works. The safest way to invest is proven to be through long-term investments.
For information and support regarding your finances specifically, I would recommend you seek out a financial advisor to help you find the best kind of investment for you.