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How to Make the Most Out of Investing Large Sums of Money – Yahoo Finance

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The prospect of investing a large sum of money can be both exhilarating and daunting. With the right approach, there’s a potential for significant wealth growth, but there’s also inherent risk involved. The importance of sound asset diversification and risk management can’t be overstated. They can help you navigate through the challenges of investing. This is why you may want to consult with a financial advisor to help you find the right types of investments that will help you reach your unique long-term goals.

Strategies for Investing a Large Lump Sum of Money

There are several strategies when it comes to investing a large sum of money. Each strategy carries its own set of pros and cons and picking the right one depends on your specific financial goals, risk tolerance and understanding of the investment market.

  • Dollar-Cost Averaging: Dollar-cost averaging, a form of regular systematic investment, is one common approach to consider. It involves investing a fixed amount of money at regular intervals, regardless of the price. For instance, investing $1,000 every month in a mutual fund benefits you by letting you purchase more units when the price is low and fewer when it is high.

  • Lump-Sum Approach: A riskier, yet potentially rewarding strategy is the lump-sum approach. It is about investing the entire amount at once. This approach often benefits from the guidance of a financial advisor due to the high risk associated with market fluctuations.

  • Asset Allocation Planning: Asset allocation planning is a strategy for diversifying your investments across different asset classes. It’s designed to protect against market volatility and spread risk, but the structure of a diversified portfolio should align with an individual’s risk tolerance and goals. In this context, a financial advisor can provide invaluable guidance.

  • Market-Timing: Market-timing is another strategy that involves predicting market movements and acting accordingly. However, due to its complexity, an inability to know the future and high level of risk involved, involving a financial expert or advisor could prove essential when adopting this approach. Market timing often fails to deliver what a passive index fund delivers.

  • Working With a Financial Advisor: To understand different investment strategies and their implications fully, working with a financial advisor can be profoundly beneficial. They can provide personalized guidance to meet your financial goals and risk tolerance, helping you create a robust investment plan.

What You Can Invest a Lump Sum In

Man watching his large sum investment grow

When it comes to investing your lump sum, there is no shortage of options, and the importance of investing in a diverse range of assets shouldn’t be overlooked. Ultimately, your choice depends on your financial objectives, risk tolerance and investment time frame.

  • Bonds: Bonds are essentially loans to a company or government. In exchange for your investment, you receive regular interest payments. Note that the return of the principal at maturity is not always guaranteed.

  • Mutual funds: Mutual funds can provide balance in your portfolio as they are often a strong long-term investment. Broad mutual funds can provide value by investing in multiple investments at the same time as well as in multiple industries. Many mutual funds have a focus area, like ESG investing, so it could benefit you to invest in multiple funds.

  • ETFs: Exchange-traded funds (ETFs) are similar to mutual funds as you can invest in multiple stocks at once. Many ETFs track an index but can provide a good amount of balance that you seek.

  • Real Estate: You can invest large amounts of money directly into real estate investments that can grow in value over time. You also might be able to invest in properties that can return income throughout your investment hold period in the form of rent from tenants.

You can essentially invest your money into anything you would like. However, the above options provide a balance and relatively safe investment environment for you to build your wealth with the money you’re investing over time.

What to Watch Out for When Investing a Large Sum of Money

Investing large sums carries inherent challenges and risks. While diversification and strategic asset allocation can help mitigate these, they can’t entirely eliminate the risks created by market volatility, inflation and interest rate changes. It’s important to have someone in your corner that understands these types of investments and has a history of investing large sums of money, especially if you’re not.

Bottom Line

Man showing his friend how his large sum investment is doing

The secret to successfully investing large sums lies in a clear understanding of your financial goals, a well-planned investment strategy and a keen awareness of potential risks. We can’t emphasize enough the importance of either conducting your own extensive research or consulting a financial advisor for a personalized investment plan. While compounding interest is great, it’s not a guarantee. Remember to work with a professional and make sure you’re prepared for changes in the market.

Tips for Investing

  • Whenever you want to see great returns over a long period of time, regardless of how much money you’re investing, you may want to work with a financial advisor. They can provide unique insight and help that you just won’t have on your own. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • One of the best tools to help you in your investing efforts is SmartAsset’s investment return calculator. You can estimate what your investments might look like over time.

Photo credit: ©iStock.com/Jacob Wackerhausen, ©iStock.com/Kobus Louw, ©iStock.com/silverkblack

The post How to Invest Large Sums of Money appeared first on SmartReads by SmartAsset.

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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