Not only have the world’s financial markets become increasingly accessible in the digital age, but they’ve also continued to diversify to allow access to a range of alternative asset classes.
This is good news for investors of all shapes and sizes, who can now utilise different vehicles to suit your underlying philosophy, risk appetite and preferred method of investment.
In this article, we’ll look at these investment channels and asset classes in further detail, while asking which one is right for you.
1. Stock Trading
In the case of traditional stock market trading, you’ll typically assume ownership of shares within a specific company.
Usually, this provides you with a tangible and secure store of wealth as an investor, creating a long-term investment vehicle that’s ideal for risk-averse traders with the desire to eek out incremental returns.
Dividend stocks can be particularly rewarding in this respect, as they tend to represent blue-chip companies that appreciate incrementally in value year-on-year.
2. Forex (or Currency) Trading
The forex market represents one of the biggest and most lucrative financial spaces in the world, and one that enables you to trade international currencies in pairs and as derivative assets.
This offers a completely different risk perspective to traders, thanks to the highly leveraged nature of forex and its inherent volatility. Thanks to the former, you can actually utilise margin to open positions that are up to 50-times larger than your deposit value, creating the potential for disproportionate gains and losses depending on your investments fare.
The currency market is also highly liquid, particularly when you trade major currency pairs that are far easier to buy and sell in real-time.
3. Futures Trading
Next up is futures trading, which involves business contracts and price agreements that cover value and time.
In precise terms, a futures contract is a standardised legal agreement to buy or sell a particular security or commodity at a predetermined price or time, which once again enables you to speculate on price movements without assuming ownership of the underlying financial asset.
You can trade futures in the UK by using a licensed and reputable platform, and ideally one that subsequently enables you to access various asset classes including energies, stock indices and precious metals.
We close with cryptocurrency, which is arguably one of the most volatile and fascinating asset classes in the contemporary marketplace.
This market definitely isn’t for the faint-hearted, as its fundamental lack of liquidity (aside from assets such as Bitcoin and Ethereum) underpins its general price volatility and can make it hard for investors to buy and sell certain instruments in real-time.
Crypto assets are also incredibly vulnerable to market developments and speculative news releases, which can cause high price and value fluctuations that will likely deter most investors from making any kind of long-term commitment.
However, this is somewhat offset by the fact that crypto assets aren’t particularly vulnerable to macroeconomic factors, making them something of a relative safe haven during times of economic decline.
Article by Born Realist