Ways to invest your capital and make it grow: profitable options to multiply your wealth

The Fundamentals You Need to Know Before Investing

If you’re wondering what I can invest my money in to multiply it, the answer depends on understanding some key principles first. Every investment decision revolves around two fundamental elements: the relationship between potential gains and the risk taken, as well as the amount of time you’re willing to keep your money invested.

Return and risk: the equation that changes everything

There is an uncomfortable truth in financial markets: there are no gains without risk. The most volatile assets tend to offer higher potential returns, but they can also generate significant losses. The key is to assess whether the expected return justifies the volatility you will have to endure.

To measure this, there is a tool called the Sharpe Ratio, which compares an asset’s return against its volatility. The formula is simple: if you divide the return by the volatility, you get a number that tells you how much profit you will generate for each unit of risk you accept.

Let’s look at a practical example: imagine two investment options. The first promises 12% annual return with 9% volatility. The second offers 18% annual return but with 25% volatility. At first glance, the second seems better. However, applying Sharpe:

• Option A: 12 ÷ 9 = 1.33
• Option B: 18 ÷ 25 = 0.72

So, the first option gives you more return per unit of risk you assume. It is the more efficient asset, not necessarily the one with the highest nominal return.

Time: your most valuable ally

To multiply money, you need time. There are no realistic shortcuts. The true secret lies in two factors: starting as early as possible and continuously reinvesting your gains.

This is where compound interest comes into play, a concept that works like financial magic. If you have €100 earning 10% annually and let the interest be reinvested, by the second year you don’t earn an additional €10, but €11. The third year will be €12.1, and so on. The effect is exponential.

This accelerated growth is what differentiates investors who generate real wealth from those who only achieve marginal gains.

Critical mistakes you must avoid

Before knowing the best places to invest my money to multiply it, it is crucial to understand what can go wrong. Financial markets are complex and can be dangerous for those who are not properly prepared.

The right question is not how much money you want to earn, but how much you’re willing to lose. Invest only amounts you can afford to lose without affecting your financial stability. Never make all-in bets.

The most successful investors are not necessarily the smartest. What sets them apart is discipline and consistency. They follow a method and do not abandon it, regardless of emotional moments.

You should also be aware that pursuing higher returns means accepting greater volatility. There are no exceptions to this rule. And finally, use all available tools: set profit and loss limit orders to protect your investments.

The best options for investing your money

Stocks: the most well-known investment

Stocks represent ownership in companies. When you buy a stock, you earn money in two ways: through price appreciation and dividends distributed by the company.

Stocks are visible, media-friendly, and accessible. Everyone knows Apple, Amazon, Tesla, or Microsoft. This makes research and informed decision-making easier.

Main advantages:

• Long-term high return history
• Easy access to public information
• Possibility to create diversified portfolios by sector, size, or geography
• Double income streams

Disadvantages:

• Susceptible to market manipulations
• Corporate information may contain fraud
• Requires fundamental analysis of companies

Commodities: investing in tangible assets

Commodities are basic resources: gold, oil, natural gas, coffee, soy, precious metals. They have been traded since ancient times and gave rise to futures markets.

Gold is especially interesting as a hedge against inflation. When currency loses value, this metal tends to maintain or increase its price, providing security for your wealth.

Advantages:

• High trading volume
• Tradable 24 hours
• Useful for diversifying risk in mixed portfolios
• Arbitrage opportunities

Disadvantages:

• Very high volatility
• Many geopolitical and economic factors affect prices
• Difficult to maintain long-term strategies

Indices: easy access to complete markets

Indices group multiple assets based on specific criteria, usually geographic. The IBEX 35 represents the 35 largest Spanish companies. The DAX 30 includes the 30 main German stocks.

The advantage is simple access to entire sectors or regions without choosing individual companies.

Advantages:

• Quick and cost-effective access to sectors or regions
• Automatic diversification
• Low commissions
• Proven and stable vehicles

Disadvantages:

• Cannot select individual components
• Slow to capture emerging trends
• Limited flexibility in weighting

Cryptocurrencies: the next-generation asset

Bitcoin, Ethereum, and other tokens represent a completely new category. These digital currencies are generated via blockchain technology, and their market exceeds trillions of dollars.

Cryptocurrencies have been the best-performing asset over the past five decades. They emerged in 2009 as an alternative to the traditional banking monopoly but have evolved into a full ecosystem of decentralized applications.

Advantages:

• Maximum historical returns
• Thousands of different options
• Independence from political decisions and central banks
• Negative correlation with inflation (Bitcoin has proven to protect against devaluation)

Disadvantages:

• Extreme volatility
• Requires considerable technical understanding
• Market still in development
• Uncertain regulation

Forex: currency trading

Forex is the exchange of currency pairs: EUR/USD, GBP/CHF, etc. It is the largest market in the world, with virtually unlimited liquidity.

Advantages:

• Most liquid market on the planet
• Allows high leverage
• Operates 24/5 without interruptions
• Many daily opportunities

Disadvantages:

• Requires leverage to achieve significant gains
• Countless economic and political factors affect prices
• Increased risk due to leverage

Investment strategies according to your profile

Buy and hold (Long Only)

This favorite strategy of investors like Warren Buffett is based on the conviction that true value is generated in the long term. You buy assets you believe are undervalued and hold them for years, without engaging in speculative trading.

It requires patience but is the least demanding in terms of daily time commitment.

Long and short positions (Long/Short)

This more sophisticated technique combines buying and selling positions simultaneously to reduce volatility. For example, if you believe airlines will fall due to rising fuel prices, you buy airline stocks but sell oil. Thus, gains from one position offset losses from the other.

It generates stable returns but requires greater technical skill.

Day trading (Daytrading)

Day trading executes operations within the same day, capitalizing on quick movements. It requires constant monitoring of screens and quick decision-making.

Only recommended if you can dedicate many hours daily to trading.

Contracts for Difference: amplifying your results

CFDs (Contracts for Difference) are derivatives that replicate the movement of an underlying asset without actually owning the asset. Their main advantage is allowing short operations and applying leverage, amplifying both gains and losses.

If you believe an asset will make a significant move, CFDs allow you to boost those results substantially.

Conclusion: your personal strategy is key

There is no one-size-fits-all formula to answer what I can invest my money in to multiply it. The answer depends entirely on your profile, risk tolerance, time horizon, and technical knowledge.

What matters most is starting with small amounts in assets you understand, gradually gaining experience, and increasing exposure as you build confidence. The path to wealth multiplication is a continuous learning process, not a race for quick riches.

Discipline, patience, and ongoing education are your true allies.