What Assets Can I Buy to Make Money?

Assets are items of value that can increase in worth or provide consistent earnings, serving as tools for building wealth. Understanding how different types of assets function is a first step toward making informed financial decisions. This article explores various asset categories accessible to individuals, detailing how each can contribute to financial growth. Assets offer diverse pathways for accumulating financial resources through appreciation in value or regular income distributions.

Understanding Common Market Assets

Investing in publicly traded companies involves purchasing stocks, which represent fractional ownership. As a company grows, its stock price can appreciate, leading to capital gains. Many companies also distribute a portion of their earnings to shareholders as dividends, providing a regular income stream. Stocks are bought and sold through brokerage accounts, allowing investors to participate in various industries and global markets.

Bonds function as loans made by an investor to a corporation or government entity. In exchange, the borrower pays periodic interest payments over a specified term. At the bond’s maturity, the original principal is repaid to the investor. Government bonds, such as U.S. Treasury bonds, have a low risk of default, while corporate bonds may offer higher interest rates due to greater perceived risk.

Mutual funds and Exchange-Traded Funds (ETFs) offer a way to invest in a diversified portfolio of stocks or bonds. These funds pool money from multiple investors to purchase assets managed by professionals. Mutual funds are bought or sold once a day at their net asset value, while ETFs trade on exchanges throughout the day like individual stocks. Both types of funds can generate returns through capital appreciation and by passing through dividends and interest earned from their holdings.

Exploring Real Estate and Property

Direct property ownership involves acquiring physical real estate, such as homes or commercial buildings. This investment can generate returns through rental income, providing steady cash flow. Property value may also increase over time, leading to capital appreciation if sold for more than its purchase price. Acquiring property involves a down payment and often a mortgage, with ongoing responsibilities for maintenance and property taxes.

Real Estate Investment Trusts (REITs) provide an alternative way to invest in real estate without direct ownership. REITs are companies that own, operate, or finance income-producing real estate across various sectors, such as apartments or shopping centers. They are publicly traded, making them accessible to investors through brokerage accounts, similar to stocks. REITs are legally required to distribute a significant portion of their taxable income to shareholders as dividends, offering a regular income stream from their real estate holdings.

Venturing into Emerging and Other Assets

Commodities are raw materials or agricultural products, such as gold or crude oil. Their value is influenced by supply and demand in global markets. Investors can gain exposure through commodity-focused Exchange-Traded Funds (ETFs) or futures contracts. Returns are primarily generated through price fluctuations, where an investor profits if the commodity’s price increases after purchase.

Cryptocurrencies are digital assets that use cryptography for security and operate on decentralized networks. Bitcoin and Ethereum are popular examples. They can generate returns through price appreciation, as their market value fluctuates based on demand and adoption. Some cryptocurrencies also offer opportunities for staking or lending, where holders can earn additional units or interest by participating in network operations or lending assets. These digital assets are acquired through specialized cryptocurrency exchanges.

Peer-to-Peer (P2P) lending platforms connect individuals or small businesses seeking loans with investors. Investors on these platforms act as lenders, earning interest payments on the money they lend. Interest rates and terms vary depending on the borrower’s creditworthiness and the loan’s duration. Participating in P2P lending involves selecting loans to fund and receiving scheduled repayments, including principal and interest, directly through the platform.

Precious metals like physical gold, silver, or platinum are considered a store of value. Their value can appreciate due to market demand or as a hedge against inflation. Investors can acquire physical bullion or gain exposure through metal-backed Exchange-Traded Funds (ETFs) that track the commodity’s price. Returns are primarily realized when the metal is sold at a higher price than its purchase cost.

Initiating Your Investment Account

Selecting an investment platform or brokerage firm is a necessary first step. These platforms provide the infrastructure for buying and selling securities and vary in terms of fees, available investment products, and research tools. Many online brokerages offer a wide range of services, catering to both new and experienced investors. The choice depends on individual preferences for cost, customer support, and the specific types of assets one intends to purchase.

Opening an investment account requires providing personal identifying information, including your full legal name, address, date of birth, and Social Security number. Brokerage firms are legally obligated to verify this information to comply with financial regulations. Common account types include taxable brokerage accounts, where investment gains are subject to annual taxation, and Individual Retirement Accounts (IRAs), which offer tax advantages for retirement savings. These accounts serve different financial planning objectives.

Funding the newly opened account is the next step to enable investment activity. Most brokerage platforms offer several common methods for depositing money, including electronic transfers from a bank account (ACH transfers), wire transfers, or mailing a physical check. The time it takes for funds to become available for trading can vary, with ACH transfers taking a few business days to clear. Once funds are settled, they are ready to be used for purchasing assets.

Placing an investment order involves instructing the brokerage to buy a specific asset. This entails searching for the asset using its ticker symbol, an abbreviation for publicly traded securities. Investors can choose between a market order, which executes immediately at the best available price, or a limit order, which specifies a maximum purchase price or minimum selling price. Understanding these order types helps ensure trades are executed according to one’s desired parameters.

Gains from investments, such as capital gains from selling an asset, dividends from stocks, or interest earned on bonds, are subject to taxation. The specific tax treatment depends on the type of gain, the holding period, and the account type. For instance, gains within tax-advantaged retirement accounts like IRAs may be deferred or exempt from immediate taxation, unlike those in standard taxable brokerage accounts. Investors receive tax forms from their brokerage summarizing their investment income and gains for the year.