Where to invest your money 2: how to be rich by learning to multiply your money

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Do you want to be rich? Do you want to Do you want to understand how to multiply your money?

The key to becoming wealthy lies in mastering the basics of investment and long term wealth accumulation. If you are interested in multiplying your earnings by investments, here are three investment vehicles that could help you reach your financial dreams

Private Equity

This involves investment in investments in companies not quoted on the stock exchange. The key attraction here is the potential for very high returns. You can invest in a startup or growing businesses of a friend or someone introduced to you as a friend. This makes you an angel investor. There are substantial risks however with such investments and care must be taken by an investor to understand the details of the businesses before putting his money. Exit strategies include buyouts or an IPO (Initial Public Offer)

Hedge funds

Hedge funds are generally privately-owned investment funds, and so are not regulated like mutual funds whose owners are public corporations. Hedge funds managers use sophisticated derivatives, such as futures contracts, options and puts in achieving above market returns. Hedge funds are largely attractive to wealthy individuals and institutional investors who are frustrated by mutual fund fees that are paid regardless of fund performance.

Corporate and government Bonds

Bonds are fixed income securities issued by a corporations, state governments, or even nations. . Since many of these entities are so large, they need to borrow the money from more than one person or bank. Bonds like loans return a fixed interest payment to the bond holder. They are attractive to investors when the economy and stocks market decline however, when the stock market is doing well, investors are less interested in purchasing bonds, and their value drops.

Commodities

Commodities are agreements to buy and sell virtually anything except, for some reason, onions. The primary commodities that are traded are oil, gold and agricultural products. Since no one really wants to transport all those heavy materials, what is actually traded are commodities futures contracts or options. These are agreements to buy or sell at an agreed upon price on a specific date.

The commodities markets are in Chicago (Chicago Board of Trade) and New York (New York Board of Trade, and the New York Mercantile Exchange).

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