What Are the Best Investments for You?

I remember my friend's first foray into the stock market. He was a guy who was very artsy, and didn't really pay attention to stock trends. Despite the fact that he didn't know the first thing about the stock market and that he had no interest in looking at a single chart, he was convinced he'd make it big.

Within about three months, the guy who chose stocks based on them being cheap (yes, all penny stocks) lost everything he put in. Stocks were not the best investment for him, and he quickly realized his problem. He just wasn't the type of person to learn how to invest in the stock market like a pro.

That being said, this is a story that's not all that uncommon. A lot of people don't really think about how to fit their investments to the type of personality they have. If you want to find the best investments for you, take in the pros and cons of these different routes.

The stock market remains one of the best ways to make it rich for most people. The longer you invest, the more time will impact your investments in a positive way, which is why common wisdom is that you should start investing in stocks as soon as possible.

When you buy a share of stock, you're buying a share of a single company. The company can pay you in dividends or you can wait for the value of the share to grow until you sell it at a profit.

The Good:

Assuming that your portfolio just meets the market, you can expect an average return of investment of 7 percent per year. That's not a bad way to go, and that's wonderful if you're looking at a way to get retirement funds.

It's also a good way to make large returns via short selling. However, you'd have to make one of the best stock market trades in history to be a billionaire.

You can now invest via apps, too, with many involving low to no fees. So, startup fees are relatively low compared to other similar options.

The Bad:

Buying regular stocks of a single company can be a good route—if you're willing to do the research on every stock you want to invest in. It takes a lot of knowledge and skill to do this, and at times, it can still end in failure.

If a company that you own stock in folds, then you will likely lose all the money you put in.

The Verdict:

If you're okay with doing your research and want a lot of control over your investment time, this is probably one of the best investments for you. However, this is a very "hands-on" option that can easily overwhelm newbies.

Funds

Funds are a lot like stocks, and run in a variety of different flavors. They can be bought and sold on stock exchanges like stocks. However, the big difference with funds is that they aren't based on a single company; they are shares that are made of slices of different stocks and are "glued" together.

Funds can be built around a theme, a financial goal, or even based on market indexes. You invest in private hedge funds, the best S&P 500 index funds, or just put money down in ETFs.

The Good:

If you're looking for a good way to get into the stock market if you're new and don't want to put in too much effort to get gains. These are more stable than regular stocks, can be invested in using beginner-friendly apps like Stash, and are professionally managed.

The Bad:

If you need full control of your investments, funds are not going to be a good match. If you aren't willing to put in light research into funds, then you also might suffer a loss—albeit, not as catastrophic as what people would suffer in the stock market.

The Verdict:

Fans of the stock market who want a more "set and forget" route will love this option. It may be one of the best retirement prep investments for you, especially if you're not used to investing.

Who doesn't need a home? Real estate remains one of the most popular forms of investment out there, and if you're not into the stock market, it might be one of the best investments.

A keen eye for local real estate, a willingness to get extra help flipping homes, and connections to funding sources can all help you become a good real estate investor. Donald Trump and Robert Kiyosaki both made fortunes in real estate, so why not you?

The Good:

There are tons of ways to invest in real estate, including landlording, REITs, and flipping homes. In many cases, real estate can lead to steady income and a lot of financial safety during times of economic volatility.

Some sites, like Fundrise, allow you to invest in real estate projects for as little as $500 without ever requiring you to have a real estate license. If you know where to get hard cash for house flipping, you could also easily start with no money down.

The Bad:

One bad renter is all you need to have your life savings destroyed. Also, if you invest during a real estate bubble, you may end up being unable to sell a house you're trying to flip, or could end up losing a lot of your money.

Traditional routes can make you a lot of bank, but they also can have very high startup costs. If you want to "flip and sell," or if you want to be a landlord, you will need to have a good network or people to help you out.

The Verdict:

There's a reason why real estate is so popular, but is it always worth it? Well, it all depends on whether you feel that this route has some of the best investments for you. If your heart calls you to it, it could be your retirement vehicle.

Angel Investing/Venture Capital/Private Equity

Want to help build up startups? Love the idea of helping entrepreneurs come close to their dreams? If you want to do this, and are willing to spend hundreds of thousands of dollars to make it happen, you may be a good angel investor.

Angel investors are private investors who give money to startups, often with contractual obligations. They own equity in the startup and can exercise their say in it. If you're lucky, you could Angel Invest the next Facebook!

The Good:

Returns can be far higher than regular stocks, and you may also have a say in how the company operates. Being an angel investor makes you a sought-after individual and you may be able to help guide new entrepreneurs towards success.

The Bad:

Scammers, many of them, want to find an angel investor to fleece. The amount of due diligence you need to make causes this to be an incredibly high-risk endeavor. If you aren't careful, you can get very badly burned.

Finding good businesses is something that you will have to do all your own. You might not actually have the network or the net worth it takes to be an angel investor. The failure rate of new businesses is also something to remember; you could lose it all by picking the wrong company.

If you're looking to invest large quantities of money, you might also need to register with the SEC as a venture capitalist. That can involve some serious red tape.

The Verdict:

If you're okay with choosing one of the most dangerous investments you can make, then this might be one of the best choices.

Artists will be happy to know that they might be able to turn their creativity into a private investment of their own. If you create your own e-books, sell off rights to your music, or just sell artwork that you make through dropship companies, you could actually create your own form of investment.

The Good:

Here, the investment tends to be not money, but time and effort. It can provide a stable income to those who know how to market themselves well online. It's also pretty rewarding to see your creativity being appreciated and bought up.

It's not a traditional form of investment, but if you are looking for a low-risk venue, you can't get better.

The Bad:

No lie, you probably will not be able to retire on creative rights alone. You also will need to have serious artistic skill, some marketing muscle, and a little bit of luck in order to make money this way.

The Verdict:

If you're looking for a little extra passive income and a lot of fun, this is one of the best investments for you. However, you're best doubling your investments with something more traditional like stocks or bonds.

Bonds

Bonds are very similar to stocks, in the sense that they are considered to be traditional investment methods that are excellent vehicles for retirement. However, that's where the similarities end.

Bonds are issued out by governments and companies, and have to mature in order to have the benefits doled out. When an entity issues out a bond, they are issuing out debt that they're agreeing to repay with interest. In other words, it's an investment that's supposed to be a form of guaranteed income.

Every entity that issues bonds has a credit rating that you can check to determine how likely they are to pay back the debt. Those with good credit will typically issue lower returns, but hey, it's guaranteed.

The Good:

Guaranteed returns are awesome, no matter who you are. If you go for government bonds from an established country, you're looking for one of the safest investment vehicles out there. This is an ideal choice for retirees who need to lower risk.

If you're willing to take the risk, low-credit bonds can provide a huge amount of returns. So, it could be the best of both worlds depending on your research.

The Bad:

Junk bonds are a thing, and if you invest in the wrong ones, you can lose all your money. A company or country can't pay off loans if they are no longer extant, and if they fold, the money you placed in them folds too.

Moreover, you have to have a lot of patience with bonds. You need to wait for them to mature. If you are looking for quick returns, this isn't one of the greatest investments for you. You will need something more liquid.

If you are not risk-friendly, then bonds are great. The only problem with high grade bonds is that they tend to have very low returns. Depending on where you invest, you might actually be better off just keeping your money in a high-yield savings account.

The Verdict:

Every portfolio, realistically, should incorporate bonds in some way, shape, or form. Common wisdom strongly suggests leaning more towards bonds as you reach retirement age, simply because they are so reliable.

Trendy as a speakeasy in SoHo, cryptocurrencies are definitely the hottest investment on this list. People are all talking about mining Bitcoin, which cryptocurrency will be the next to boom, and how to make more money off the latest ICO.

You've probably already been wondering if cryptocurrencies are a good option for you, simply because the buzz is so hot. So, let's talk about whether this is one of the best investments for you.

Cryptocurrencies are forms of digital currencies that are traded as a way to fundraise for different tech companies. Some, such as Bitcoin, are also used as currency alternatives and are seen as an investment in and of themselves.

Cryptos are considered to be some of the most dangerous investments you can make, but many people have become millionaires from them. So, it's up to you to decide whether you should go in on it.

The Good:

If you are smart enough to invest in cryptocurrencies that become popular, and if you're lucky enough to enter the market when things are about to explode, you can get returns that are unlike anything you could expect from the stock market.

For example, people who invested in Bitcoin during the early stages may have only spent a couple hundred dollars for a couple of coins when they started out. When Bitcoin ballooned to over $20,000 per coin, the returns they got were outrageously high. Many Bitcoin millionaires have been created this way.

Investing in an ICO can also help further technological advancement and bring opportunities to people who never would have had a chance otherwise.

The Bad:

There's a lot of reason why major companies and investors still shy away from the concept of cryptocurrencies. They are exceedingly risky because they are not backed by anything but hype. Companies don't back them, unless they're bank-made like Ripple. Governments don't back them, either.

A lot of cryptocurrency and ICO scams exist, which means that due diligence is crucial if you want to see returns. Unlike stocks and bonds, no laws really govern crypto, so you're really on your own. As a result, how well you research your stuff means more than ever here. Tech knowledge, as you can imagine, matters a lot here.

If the value of a currency plummets to zero, that's it. Moreover, they are extremely volatile and unpredictable. There's no regaining your money, regardless of how hard you try. Many people have lost serious amounts of money because they invested in the wrong currency or at the wrong time.

To make matters worse, hacking and cybercrime also play a huge factor in the risk. The methods of storing Bitcoin are never 100% foolproof, and almost no insurance will be in place to save you if you're hit by a hack. If someone hacks your Bitcoin wallet and takes your money, you're done. There's no recovery, period.

Additionally, many governments are now cracking down on cryptocurrency trading. So, your investments may end up being illegal in a couple of years if you're very unlucky.

The Verdict:

Are you one of those people who love a lot of risk? Do you love tech, understand the internet, and have extra cash you're okay with potentially losing? Then this is the perfect investment for you.

If you are not tech-savvy, or if you are looking for a low-risk investment, you may want to look elsewhere. Even so, you may want to consider adding a little crypto to your portfolio if you want to diversify your stuff.

Commodities

Commodities are items that we use every day—most often in their "raw material" form. If you've ever wanted to invest in the prices of large-scale production materials as wood, soybeans, corn, and metals, you might be thinking that commodities are some of the best investments for you.

You can invest in commodities by buying up the physical forms of them and storing them for resale, by trading stocks based on their future prices, or by investing in trusts. In many cases, you may need to invest through a specialized trading firm to break into this.

Commodities, much like cryptocurrencies, are very volatile and require a lot of knowledge in order to maximize profits. But, if you have the right tools and skills, you can make a killing.

The Good:

Commodities are always in demand, simply because we often need them to survive. This means that you don't have to worry about commodities becoming worthless. They also can have incredibly high returns that exceed the stock market's typical return by as much as 1000 percent.

The Bad:

The bad part about investing in commodities is the fact that it's a very "Boy's Club" type of investment. In many cases, you need to be a professional investor to access the knowledge necessary to make a profitable purchase.

Most people won't ever know how to invest in commodities profitably, so it's generally a no-go for many. To make matters worse, the entry fee of investing in commodities is often very high. You may not have the kind of money needed to even break into the game.

Additionally, there aren't many tools available for investors that aren't trading commodities professionally. As a result, you're going in dramatically underequipped.

Finally, the biggest issue with commodities is the volatility. Commodities are so volatile, actual laws had to be put in place to deal with the fluctuations. In other words, it's not a rodeo for people who don't want to have heart attacks.

The Verdict:

This is one of the best investments if you are a professional trader with a lot of education on the topic. Otherwise, you will probably get burnt.

Though you might not ever hear an science major say, art can be very profitable. One of the most popular ways to make money off of art is to invest in fine art. Since fine art appreciates in value significantly as time passes, people who are lucky enough to buy the right painting can easily become millionaires in a decade or so.

Fine art and collectibles investors will often peruse galleries, antique shops, and auctions to find the right investment piece for them. If they are very lucky, they may easily be one of the people who buys an item at a yard sale, then sells it for millions later on.

The Good:

If you have a wealth of knowledge in the arts, then you could easily make a killing in this field. This is doubly true if you have the connections needed to attend art auctions and extra money to invest.

The potential of returns is sky-high, especially if you are savvy about artwork in your area. Choosing the right painting can easily turn $2,000 to $20,000 in a matter of five years.

The amount of money that you need to enter has also never been lower. Sites like Masterworks.io allow you to invest in pieces of art worth millions with as little as $500.

This also remains one of the only investments that doubles as a luxury treat for yourself. You also could use your investments to decorate your home and wow guests, if you're into that sort of thing.

The Bad:

Fine art is a gambit. Some artists who were once beloved end up being left to the wayside. If you are not well-aware of the art scene, you could easily end up spending a bunch of money on worthless items. They may look good, but they won't end up with rewards.

Of course, there's also the chance that you may end up having the art stolen or that you may buy a counterfeit. If this is the case, your investment will likely be a wash.

The Verdict:

If you have the knowledge and money to do so, investing in art can be a wise decision.

Money Market Accounts were some of the hottest investments of the 80s, primarily because they offered high yields and liquidity in one nice little package. These are specialty bank accounts that give a higher yield than most other bank accounts—but also limit the amount of times you can withdraw.

This is a low-risk investment that offers a lot of good. There was a time when they had much higher yield rates, but that time is gone. However, that doesn't mean it's not one of the greatest investments for you. It still has its perks.

The Good:

A MMA will allow you to withdraw money that you put in at least three times per month, so it's definitely liquid. It also has higher returns than a typical bank account will have. As far as risk goes, this is as low-risk as you can get.

Money market accounts are FDIC-insured, which means that you don't have to worry about losing your funds if the bank folds. It's a good option for retirees looking to preserve wealth.

The Bad:

Low returns compared to other investments are the biggest detractor for investors. You also may have to invest a couple of thousand to open an account.

The Verdict:

Good for retirement plan type things, but if you want to beat inflation, this may not be one of the best investments for you. This is good if you've maxed out your 401K and Roth IRA, but want to have more money stashed away.