Ways to Invest for Capital Gains

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6 ways to make money

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

Investment income is the income you get from assets, and examples of investment income are savings interest, property rentals, and stock dividends.

Capital gains are the appreciation of assets; examples of capital gains are the appreciation of property, shares, and other assets.

Some investments provide capital gains but no income. Examples include precious metals such as gold, bitcoin, antiques and other collectible items.

The following are investments that provide capital gains:

Stock market

The stock market provides an excellent opportunity for capital appreciation. For most people, direct investment in the market is not feasible because it is not worthwhile to charge transaction fees once stocks are bought and sold. However, there are many managed funds that investors with limited management can participate in. New Zealand is one. Investors can invest funds into the market through Sharesies, and can choose to invest in various funds or individual companies. Other similar types of platforms in New Zealand include Investnow, Kernelwealth and Hatch. These are not unique.

Your retirement plan is invested in custodians (mutual funds), which are also a form of capital gains. In New Zealand, joining Kiwisaver is effortless. Kiwisaver is New Zealand’s retirement plan.

property

For many investors, the real estate market has been a popular “captain profit” tool, not only using their money, but also using other people’s money in the form of loans. The income is derived from the rent used to pay the mortgage. All related costs are the most popular form of capital gains and the easiest way for novice investors to get involved in the market and learn on the go, because there are several mutual funds available and start-up costs are extremely low. In New Zealand, Sharesies can be entered for only $1, which gives you the opportunity to invest in managed funds or individual companies. This is a good way to exempt taxes. This type of investment may turn into an ust, such as willful tenants. If you are ready to take risks, then this investment may be suitable.

If you plan to sell your home at some point, then your own home can be a good source of capital gains.

Another way to enter 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 in managed funds that invest in real estate.

Compound interest

You must have heard of compound interest; that is, when you invest in a fixed-term account, you will get x% interest. Instead of depositing your interest payment into your bank account, you can add it to your principal to earn interest from the principal and previous interest. This is called compound interest.

The increase in your capital is called “capital gains.”

The current (2020) interest rate is very low; in some cases it is lower than the inflation rate, which makes this investment less attractive. Therefore, please do your due diligence and do not be tempted by certain financial companies that offer higher than normal interest rates, because higher interest rates bring higher risks. These financial companies that offer higher interest rates provide loans to riskier borrowers.

I am not saying that you should not invest your money in these companies, but should conduct due diligence, at least diversify your investment portfolio, rather than invest all your life savings in one company.

Gold

This is purely speculative, but it can deal with market downturns well. One disadvantage of gold is that it has found a place to store it. Another way to invest in gold is to buy gold stocks in the stock market. Buying gold coins from auction sites (e.g. eBay and Trademe) is another option. As with other investments, you need to do homework and read all about gold and other precious metals.

Cryptocurrency

Cryptocurrencies such as Bitcoin should be considered as speculative investments, so only invest money in them if you can afford to lose. What I mean is to use your arbitrary income to buy cryptocurrency. This type of investment may be a roller coaster, but a useful recommendation is to not only buy all cryptocurrencies in one transaction, but also to invest once a week, every two weeks, or every month so that you have the opportunity to buy when the currency is low . This is called averaging.

Collectibles/Antiques

When you plan to sell, investing in collectibles can bring you satisfaction and a sense of profit. When buying and selling antiques, you really have to know your own things. Always remember that only what others are prepared to give is worth it. If someone is willing to pay $1,000 for a painting in the auction, it is worth it, but if another painting is auctioned for only $10 in the auction, it is worth it. The value of things is only insights.

Recently (2020), some of Banksy’s paintings were sold in New Zealand for more than US$100,000. The seller of these paintings paid a total of US$500 for these paintings in London (UK) a few years ago. It just illustrates how bargaining can make a profit.

For smaller items, such as stamps, banknotes, beer labels, etc., collectors can list their copies on the auction website to help their hobbies.

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