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If you already have your emergency savings account funded and your household debt is under control, then you may have started looking up ways that you can invest your money. These days, you don’t have to have tons of money to start investing and technology is making it easier than ever to invest. As a single mum, however, your goal should be to find something that will allow you to get constant gains while minimising your risk. Thankfully, there are plenty of ways that you can invest that will allow you to do just that. Here are some great investment methods every single mum should consider.
Certificate of Deposit
Certificates of deposit, or CDs, are one of the safest and most predictable financial instruments that you can use. The average term on CDs is usually between one and three years, but you can find CDs that last for only a few days and others that can stretch over a decade. With certificates of deposit, the longer the term, the more you’ll make on your investment.
One of the benefits of CDs is that there’s no speculation involved and minimal risk. However, it’s also one of the reasons why returns are not very high on them. But they’re still a better investment than letting your money sit in your savings account.
You also have to be aware that you will need to deal with penalties if you want to access the money before the CD reaches its maturity. These penalties will vary depending on the bank, but you would lose as much as six months’ worth of interest if you do so. You could even lose a portion of your initial deposit depending on the terms. So, before you invest in a CD, you have to absolutely make sure that you’ll be able to deal without accessing this money for a while. You should also shop around and consider credit unions as well, as they often offer better rates than major banking institutions.
Bonds are also a safe option for single mums who want to start investing. Bonds are a form of debt investment. Municipalities, countries, and companies often sell bonds to investors with a promise to pay them back with interest. This is a way for them to access credit without having to seek financing from a financial institution.
But while bonds are viewed as a low-risk investment, they’re not a no-risk investment. If you take a bond to a company, there is always a chance that it will go bankrupt and that you’ll lose your money. So, you have to assess how much risk you are willing to take and only invest money you can afford to lose. Government bonds, notes, and bills are usually a much safer bet, however, they don’t always offer the best rates. But they’re usually backed by the country issuing them, so there’s little chance that you will lose your money if it’s a trustworthy government.
The forex or foreign exchange market is a great way to invest in the foreign currency markets for a low initial investment. With leverage, you could be able to control thousands of dollars in assets with small upfront capital. But it could also be a pitfall since you expose yourself to massive losses as well.
Contrary to what many may think, understanding global financial markets is not easy, even if forex is probably one of the easiest markets to enter. While the principle behind forex may be simple to understand, the amount of experience and analysis required to make trades is significant and you have to be ready to learn through education and trial and error until you find a strategy that works for you.
If you want to minimise your risk while you’re getting started and learn more about how the markets work, one solution would be to pick a broker that will allow you to do some social or copy trading. Social trading allows you to join a community of savvy investors, follow those you like with a solid track record, and copy their moves manually. With copy trading, you can put everything in autopilot and let your broker automatically copy the trades of a trader of your choice. One example of a broker that offers social and copy trading is eToro. If you want to learn about them, check out some of the features they have to offer and get a thorough review of their platform and service, you can get more information at InvestinGoal. On their website, you can find an in-depth guide to eToro which will give you a tutorial on how to use it, list the pros and cons and a general round up on how recommended it is. Etoro is an incredibly popular choice for investors, but you’ll want to make sure it’s right for you before you start using it.
Investing as a single mum requires some savoir faire, cautiousness, and a thorough understanding of the financial instrument you’re thinking of using. Make sure that you do your homework and see which investment option would work best depending on your level of risk tolerance and the kind of returns you’re looking for.
This is a collaborative post.