What to invest money in to make money? What is worth investing in for the long term, and what assets to buy with the short term in mind? Is it even possible to invest safely with a certain profit? These are only some of the questions that the investor faces. Investing money is one of the key financial decisions that sooner or later everyone faces when they strive to secure their financial future, wonder how to multiply their money or simply protect their funds against inflation.
How to start investing in 2025?
What is worth focusing on at the very beginning of your adventure with investing is to define your investment goals and assess your own financial situation. To do this, you need to answer a number of questions, m.in. what funds you want to invest, whether security is a priority, whether you are open to greater risk, what investment horizon you are interested in. In order to choose the right instruments, it is also worth getting acquainted with the specifics of the functioning of various investment markets. Only then will we be able to make fully conscious decisions related to the investment of our savings, choosing good investments and investment strategies tailored to our needs.
Growing geopolitical tensions (including the ongoing war in Ukraine or more and more question marks around the Middle East), expectations of the start of interest rate cuts in the US, inflation, materializing signs of an upcoming recession – all these factors raise the question in investors’ minds of what to invest in the current reality. So, what is profitable to invest in? Where to put the money?
Shares of listed companies
Investing in shares is certainly one of the first thoughts that comes to mind when people are wondering what to invest their savings in. Investments in shares make us co-owners (shareholders) of the company. If we have correctly assessed its potential, or more precisely, the potential of shares (we decided to invest when they were undervalued), we should make money on the growth of their price. In addition, the company can also share the generated profit with us in the form of dividends. How to invest in the stock market? Investing in shares can be carried out using various strategies, depending on the field in which we specialize, and thus whether we have the ability to recognize opportunities in this area – appropriate knowledge in a given field often makes us better able to assess the profitability of the investment. Although for many people it seems impossible to invest safely on the stock market, regularly expanding our knowledge of various sectors can protect us from making an investment mistake. Importantly, with today’s possibilities, we are also not limited to the Warsaw Stock Exchange – many brokers allow you to invest on the global stock exchange. This is important, if only from the point of view of diversification (in this case, also geographical).
Bonds
Another form of capital investment is an investment in bonds. When a given entity, company or government needs to raise capital to continue functioning, it can issue debt, i.e. bonds. The buyer of such securities after the end of the term of the bond, receives back his capital, and also additional funds in the form of interest for lending it. As in the case of shares, the key is what will happen during such a transaction, and in addition to the risk related to the condition of the entity to which we have entrusted capital, the market environment and inflation are also most often looked at. This was clearly seen, for example, by holders of treasury bonds (issued by the government) before the disclosure of the strong wave of inflation growth in 2021-2022. If they had fixed-rate debt, such a bond did not protect against the increase in inflation. So, how to invest money in bonds? What is worth paying attention to? Investing in bonds, depending on our knowledge of the market, can be carried out using various strategies – purchase debt issued by low- or higher-risk entities (they will have a different interest rate), opt for bonds with a fixed or variable interest rate, or regularly paying interest, or only at the very end, when the funds are returned to the investor.
Bank deposits
Investment in bank deposits is a form of investment that has been considered the most popular for years, especially among people without much investment knowledge. Investing in deposits, as a rule, should enable the investor to store the purchasing power of the accumulated capital, and therefore the deposit should bear interest at least at the level of inflation. So, are bank deposits always the answer to the question of where to put money during inflation? Leaving aside the highly debatable methodology of calculating inflation (each of us has an individual shopping basket), in practice, in order to maintain purchasing power, the interest rate on the deposit must be slightly higher than inflation, due to the need to pay capital gains tax (the so-called Belka tax). The weakness of deposits is particularly evident in a situation where interest rates (and thus interest rates on deposits) are below it with high inflation. Then we talk about the so-called real negative interest rates – a deposit is not able to protect us against inflation, as we have observed over the last 2-3 years.
Investment funds
Without adequate knowledge about the selection of stocks, bonds or the rules of composing an investment portfolio, looking for an answer to the question of where to invest money, everyone will come across investment funds at some point. An investment in this asset class should always be clearly defined. Then the investor is relieved of the need to monitor the market situation on an ongoing basis, because this is what the teams of analysts and managers in such funds are responsible for. Which funds to invest in? What options does the investor have? You can invest in equity, bond, mixed, sectoral, foreign market, active and passive funds. Naturally, a management fee or additional capital on the profits generated is charged for such a service.