How families can build wealth by investing

Proper financial management now is crucial to the health and wellbeing of your family later. When it comes to finances, most families think in the short term. Because of everyday conveniences like credit cards, families are more concerned with paying off bills due this month. However, it’s in everyone’s best interest for parents of the family to think about future finances. What will happen a decade in the future, when inflation rises, or if kids have to go off to college?

Investing now is a good way to ensure that your family has plenty of resources in the future. If the parents can invest now, then they might not need to take out expensive education loans in the future for kids to go to college. Here are several tips for families to build long-term wealth by investing:

Invest in Real Estate

The most traditional way to invest for many families has been real estate investments. There are several ways families can invest in real estate. The most obvious way is to buy new property or land. If market prices are low in a particular area, then buying now would be a good option. If the parents are at the prime of their income generating ability, then borrowing to purchase real estate may not be a bad option. Families don’t necessarily need new property to invest in real estate. Think about the family home. If there’s an extra room or a basement, it can be rented out for supplemental income each month. The family can then save this income for future use.

Hedge with Precious Metals

For families thinking in terms of long-term investments, do not limit assets to cash. The best investment portfolios are highly diverse. If you have currency assets, then these must be hedged against market volatility with precious metals like gold. When the dollar goes down, the value of gold goes up. If there’s ever another scenario like the Great Recession or Brexit, family wealth will be protected against falling currency value by gold. Families can directly buy gold and have the metal stored or included in a gold IRA.

Join a Mutual Fund

A mutual fund is a vehicle where multiple investors pool their resources into one place and then use the money to indirectly invest in commodities, stocks, or bonds. Investing directly in the stock market is risky, and requires a lot of knowledge. Mutual funds typically allow investors to spread their money in the stock market without the hassle of having to individually pick stocks. Therefore, joining a mutual fund is a better option for families. Mutual funds have managers who make decisions regarding investments. Of course, the family will have to choose a good mutual fund with a solid reputation and a competent manager.

Company Bonds

Bonds can simply be described as loans that an investor gives a company with a guarantee of return plus interest. Bonds are different from stocks, which are more volatile. Bonds have ratings, where the higher the rating is, the safer the bond is considered to be. Bonds are a better option for families to invest in than stocks or FOREX. Choose a high rated bond from a reputable company and it will likely result in excellent returns in the future.

With the above investment options, your family can immensely increase its wealth in the future too.