Investments are the smart way to make your money work for you. With inflation, which von Mises viewed as the government’s attempt to reduce its debts without raising taxes, your money is always losing value. This has become more prominent in the past several years because everything costs more than it did a few years ago. Thus, your money is worth less than it was. Interest rates are at historically low levels, so even if you keep your money in a standard savings account with your friendly neighborhood bank, you’re losing money.
Investments are one way to address the challenges of inflation. Depending on the type of stocks you own, you may have multiple ways to make your money work. Dividend stocks are one option. There are a wide range of stocks that pay you for owning them, and this payment is referred to as a dividend. Verizon, Ford, Google, and Nvidia all pay their shareholders dividends; some stocks pay more than others. Ford is one of the top dividend stocks and will pay you almost an 8% return on your investment. This dividend is in addition to any money you make when the value of Ford’s stock rises. Thus, when you own a dividend stock, you can profit twice.
Another benefit of investments is that you can realize gains when the market rises. While some stocks pay a hefty dividend, most only pay their shareholders a small pittance, somewhere less than 5%. This is still an attractive bonus, but it can’t compare to today’s savings accounts that offer up to 8% interest. When you’re looking into the stock market, there’s a good rule to keep in mind. The rule of 72 refers to the time that your money takes to double according to the interest you receive. Simply stated, the rule of 72 means that you divide your return into 72. If you get an 8% return every year, then your initial investment will double in nine years because eight times nine is equal to 72. This is a great way to know how much you can get from your capital. Many stocks increase much more than 8% per annum. With some investments, such as Nvidia and Palantir, returns can be higher than 100% in one year alone. Only a few years ago, Palantir was trading for about $16 per share. Today, Palantir regularly fluctuates between $80 and $100 a share. If you invested $16,000 in Palantar in 2023, you would have more than $80,000 by now. As you can see, this is an impressive return, but it’s only possible with an investment.
Because investments don’t provide stock owners with a guaranteed return, there are several ways that you can lower your risk. One option to consider is owning mutual funds. These funds invest in a wide range of different companies, so if one company fails, you don’t lose all of your money. This is a great way to minimize your exposure to the market and ensure you can still earn returns on your capital investment. There are a wide variety of mutual funds, including ones that track the general stock market or a particular sector.
Investments can also come in other avenues. The traditional stock market is only one option. There are precious metals, cryptocurrency, and even foreign exchange. These are all great ways to make the most of your money and ensure that your capital doesn’t lose value due to inflation. Cryptocurrency, such as Bitcoin, has become incredibly popular. Bitcoin is trading near its all-time high price. Today, a single Bitcoin is worth about $80,000 American dollars. Traders buy and sell Bitcoins every day, so you have two options to invest in Bitcoins. You can invest for the long-term, or you can take advantage of price fluctuations. Depending on the amount of money you have invested, you may be able to more than double your original investment. Even a 2% or 3% gain can turn into something impressive, especially if you have more than $10,000 in capital to invest.
Foreign exchange has to do with buying currencies that other countries use. The American dollar acts as the benchmark for world trade, and it’s commonly referred to as the world’s reserve currency. Other countries need American dollars to do business with each other. Every time a barrel of oil gets bought or sold on the international market, it’s done with American dollars. This means American dollars have a certain value that makes them attractive to investors from all around the world.
If you’re looking for a good way to make the most of the money that you’ve worked hard to save, you may want to learn more about investments. Investments come in all types, shapes, and sizes, so it’s easy to find something that meets your level of risk-aversion. The stock market is just one option that can allow you to double or even triple your capital. You can easily set up an account with one of the online trading apps, such as Robin Hood, Webull, or Public. After you fund your account, you can buy and sell at your leisure. Depending on your goals, you may want to make multiple trades a day, or you may want to hold your investments until your retirement. It’s essential to remember that if you plan on day trading, the Securities and Exchange Commision (SEC) has certain rules in place. If you have less than $25,000 in your account, you can only make four trades every five days. If you try to trade more than this, your account will be flagged for pattern day trading, and you won’t be able to sell any stocks that you have purchased in the same day.
Investments are the smart way to maximize your capital and minimize losses associated with inflation. You can buy stocks and leave them be, or you can take an active role in overseeing your investments. Either way, you can make your money work for you by buying companies that earn profits every day.