Ways to invest for capital growth


6 ways to get capital gains

There are basically two types of investment income. Capital gains and return on investment.

Investment income is the income you receive from an asset, examples of investment income are interest on savings, rent on property and dividends on shares.

Capital gain is an increase in the value of an asset; an example of capital gains is an increase in the value of property, stocks and other assets.

Some investments provide capital gains but do not yield income; examples of these are precious metals such as gold, bitcoin, antiques and other collectibles.

Here are the investments that provide capital gains:

Stock market

The stock market offers great opportunities for capital. For most people, investing directly in the markets is not an option because the transaction fee after buying and selling shares is not worth their time, however there are many managed funds in which investors with limited funds can participate. New Zealand alone. Investors can dig money into markets with Sharesies, and have the opportunity to invest in different funds or individual companies. Other similar types of platforms in New Zealand are Investnow, Kernelwealth and Hatch. However, these are not the only ones.

Your pension scheme invests in managed (mutual funds) and they are also a form of capital gain. In New Zealand, joining Kiwisaver is not easy. Kiwisaver is a New Zealand pension scheme.

Property

The real estate market has been a popular Captain Gains tool for many investors who use not only their own money but also other people’s money in the form of loans. The income comes from the rent that pays the mortgage. All the costs involved are the most popular form of capital gains and the easiest for a novice investor to get their degree in the markets and learn as you go, because there are several mutual funds that are available and start-up costs are minimal . In New Zealand Sharesies cost only $ 1 to enter, giving you the opportunity to invest in managed funds or individual companies. This is a great way to tax. This type of investment can turn into a custard, for example, wayward tenants. If you are willing to take a risk, then this investment may come up.

Your own home is a good source of capital gains if you are going to sell at some point.

Another way to get on the real estate ladder is to buy shares of real estate investment companies in the stock market. This can be done by investing in individual companies or managed funds that invest in real estate.

Compound interest

You’ve probably heard of compound interest; that is, if you invest in fixed-term accounts at x% interest. Instead of receiving interest payments to your bank account, you allow them to be added to your principal amount, and you receive interest on the principal amount and interest prepayments. This is called compound interest.

An increase in your capital is called a “capital gain”.

Currently, interest rates are very low (2020); in some cases below inflation, which makes this type of investment less attractive. It is therefore important to exercise due diligence and not succumb to the fact that a financial company offers higher interest rates than usual, because with higher interest rates the risk increases. These financial companies, which offer higher interest rates, issue loans to borrowers with higher risk.

I’m not saying you shouldn’t invest your money in these companies, but exercise due diligence and at least diversify your portfolio, rather than investing all your savings in one company.

Gold

This is purely speculative in nature, but can be a good insurance against recession in the markets. The only drawback of gold – to find a place to store it. Another way to invest in gold is to buy gold on the stock exchange. Purchasing gold coins from auctions such as eBay and Trademe is another option. As with other investments, you should do your homework and read everything you can about gold and other precious metals.

Cryptocurrency

Cryptocurrency, such as Bitcoin and the like, should be considered a speculative investment, so invest in it only if you can afford to lose them. I say use your discretionary income to buy crypto currency. This type of investment can be slippery, but one piece of advice that can be helpful is not just to buy all your cryptocurrency in one transaction, but to do it weekly, bimonthly or monthly so that chances are you have done purchase when the currency is small. This is called averaging.

Collectibles / Antiques

Investing in collectibles can give you a sense of satisfaction and profit if you are going to sell. You really need to know your stuff when dealing with antiques. Always remember that something is only worth what others are willing to pay for. If someone is willing to pay $ 1,000 for a painting at auction, that’s what it’s worth, however, if another painting is sold at auction for only $ 10, it’s worth it. The cost of something is only a matter of opinion.

Recently (2020) some of Banksy’s paintings were sold in New Zealand for $ 100,000. In London (UK) a few years ago the seller of the paintings paid a total of $ 500 for them. It just shows how profitable a deal can be.

For small items such as postage stamps, banknotes, beer labels and so on, collectors can list their duplicates on auction websites to help fund their hobby.