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5 Investment Options for Freelancers for a Stable Future

Income is a critical instrument in wealth building and investing; however, income is not always guaranteed for freelancers and this is why it is so important that they learn to grow their money and accumulate it. The best way to do both of these is to invest in ventures that assure either short or long-term growth, depending on their goals. The asset classes available to freelancers have been evolving, with some of these classes becoming available in the last decade or two. Below, we will take a look at some of the investment options freelancers should consider.



 

Mutual Funds

The reason why mutual funds are so high on this list is that they are available to all types of investors, no matter their experience with investing. Mutual funds allow investors to invest in different types of investment vehicles without having to research these options themselves. Experts curate these mutual funds to include various investment options such as equity, stocks, gold funds and more. Mutual funds can also comprise assets from specific stock exchanges, industries and classes.

Once fund managers curate these options, investors pool their money to purchase these funds. The reason why mutual funds are such a lucrative option for freelancers is that you can invest in a mutual fund with very little cash to start and then purchase more mutual funds when you have more funds available. There are also progressive mutual funds where investors can continually invest every month to increase their potential returns over time.

Another reason why freelancers should consider mutual funds is that they are highly liquid. Because you are not locked into the mutual fund, you can sell it or withdraw money from it at any time. Ensure that you check each mutual fund to ensure there are no exit fees if you decide to sell the mutual fund or withdraw your money before the minimum period.

Another reason why mutual funds are such a great option is their returns. Most mutual funds have higher returns than you would get with other investment options, including commodities such as gold or even fixed deposit accounts.

Lastly, mutual funds are comparatively safe compared to stocks and other investment vehicles. Remember that mutual funds allow you to invest in different stocks or other instruments. This spreads out your risk between all the different instruments in that one mutual fund.

Dollar Term Deposits

You may hear dollar term deposits also called bank fixed deposits. If you want an assured return on your investment, dollar term deposits are the way to go. To invest in dollar term deposits, you need to get in touch with a bank that offers them. You then put money in an investment where you know the growth rate is fixed for the term of the investment. 

You can start with a small amount and choose terms from between 30 days and 5 years. Once this term elapses, you can choose to have the principle or the principle plus interest credited to your bank account. To ensure this happens, you should get in touch with your bank because many of them will renew your investment at the prevailing rate without letting you know for a similar period.

Interest on these deposits is paid out daily for small investments. For larger investments, usually over $500, they are paid monthly, every 6 months, or annually. The interest rate you get quoted will depend on the amount invested as well as the deposit’s term.

The reason why this is a great investment vehicle for freelancers is that you only need a small amount to start investing. The terms are also short enough and you can choose to think of the monthly payments as a monthly income.

Some lenders also let you borrow against your fixed deposit at lower interest rates than you would get if you went for a personal loan or credit card.

Stocks

Stocks are usually the first investment option many people think about when thinking about investments. Investing in the right stocks can be very lucrative, especially for freelancers who are looking to build wealth or secure their futures. Research has shown that stocks have better returns than most other investment vehicles when you invest for more than 10 years.

Do note that investing in stocks requires thorough research and an understanding of how to buy and sell stocks. Beginners can learn to buy stocks by following the guide provided by Wealthsimple. The guide explains how to choose the right stocks, how to buy fractional shares, and a lot more. Wealthsimple also has a great commission-free stock trading tool to get you started. With them, you can grow your money and build wealth with accounts that have very low fees and no minimums. They can also help you create a personalised investment portfolio once you learn to buy stocks.

The reason why stocks are such a great option is because of their liquidity. You can buy and sell the stocks you are holding at any time. Additionally, you can make a lot of money if you sell your stocks at the right time, especially if the stocks are of a known and growing company.

Do note that stocks are highly risky investments, with platforms like Wealthsimple offering financial advice to ensure your investments are protected. Also, the large number of company stocks you can purchase is enormous and this can present additional challenges.

Real Estate

Property has always been a great investment vehicle for those who have enough cash. There are several ways to invest in real estate including purchasing property, taking out a mortgage or investing through real estate funds. Purchasing property outright is an option that might not be available to many freelancers due to the amount of money it requires.

However, taking out a mortgage on a rental property is a great investment option that is accessible to many. Once you find the right property and take out a mortgage, you can use the rental payments to repay it. Do check that the lender allows you to make additional payments, which you can do so to pay off the mortgage faster. Doing so will lead to paying a lot less interest overall and make your property fully yours faster.

REITs (Real Estate Investment Trusts) are trusts that own and manage different types of properties including residential, commercial and office properties. These funds are often used by their holder to purchase property that generates a return. This return is then shared among those who put money into the fund. You can invest in a REIT using a small sum by purchasing shares in different properties. You can also increase your investment amount over time for increased returns.

Real estate offers options for a passive income, especially if you invest by purchasing the property or through a REIT. Real estate can also be sold for a profit in the future or any time you need cash to invest in another area. Lastly, real estate can also be used to secure loans that you can use to invest and build wealth.

Commodities

Commodities work similarly to stocks, but their focus is on oil, grains, gold, silver and other commodities. The commodities market allows you to invest in the future price of a commodity, much like you do with other investment options.



 

Commodities offer the same diversification you would get by investing in stocks or mutual funds, for example. This diversification can come in handy, especially when you consider the rate at which the price of some commodities moves. Also, the commodities market is inversely related to the stock market. This means that when stocks start taking hits, the price of commodities increases and vice versa. Because of this, commodities can be used to hedge against the stock market.

Commodities also do not lose their worth due to inflation. Stocks and other assets lose value as inflation rises, but commodities hold steady and can therefore be used as long-term hedges against inflation.

Commodities are also liquid but not volatile. This means you can always find ready markets for the commodities you hold without the price bottoming out as happens to some stocks. Do note that commodities markets can be affected by factors such as inflation, geopolitical stability, trade relations and much more.

Investing in physical commodities such as gold or silver is not always possible, so you can invest in their individual funds. While you do not get to hold or keep physical gold, you still gain when its value increases. This also eliminates the need to find a buyer for physical gold when you need to move it as you can just sell off the securities you hold to offload your gold investment.

It is always a good idea to start thinking about the future when you have an income. Due to the volatile nature of freelance work, freelancers would do well to start thinking about investing in their future. An investment can serve as a source of passive income or of funds used to make other investments in the future.

 

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