Besides their own home, investors can put their money into a whole range of assets such as stocks and bonds, real estate or businesses beyond investing in their own homes. Within each category, there are further choices. Choose the type that suits your needs and pyschology.
How much money do you plan to invest? When you have a little capital, your choice is limited to bank accounts and mutual funds. Some businesses require only a little capital (such as multi-level marketing) but they usually require you to put in a lot of time. As your capital base increases, your choice is much wider.
How much time do you have to research and manage the investment? If you have the right skills, you could get a higher return from your research than from your capital. Similarly, with the time you spend on management of properties and businesses.
What is your attitude towards risk – will you lose sleep if the asset falls dramatically in price? What are the consequences if you capital is wiped out?
What do you know about the nature of the asset and (the underlying business if it is a stock)? It is good advice to avoid investing in anything that you don’t really understand – many people have gone bust by not taking this advice, including rich ones.
How old are you? A younger person can take more risk. Their future income can remedy any investment setback, an avenue that is not usually available to people in their sixties or seventies.
Do you need to use the money in the near future? Most investments are for the long term, but you can easily get out of some investments such as stocks and to a lesser extent, residential property. It is much harder to get out of direct businesses and non-residential property. Money that you need in the next few weeks should be parked in a high yield bank account such as a cash management trust, whereas money needed for the next few months can be put into term deposits.