California has the largest population out of all the states in the US. Roughly 38 million people are spread across the vast geography of this West Coast state, many of whom live in large cities like Los Angeles, San Diego, and San Francisco. Many of those residents are likely searching for ways to supplement their income for a more comfortable retirement or lifestyle.
Investing is the best way to increase your income outside of a primary job. It requires putting some money into an asset in the hopes of getting net returns from that asset when the value increases.
If you live in California, or you simply want to find ways to invest in opportunities in this state, then you need to be aware of your options for generating extra income. Here are the top five investment opportunities in the Golden State.
Solar Industry
Currently, solar accounts for about 4% of the total energy production in the United States. In an era where many people, especially those living in California, are seeking ways to reduce their carbon footprints, solar is a technology that is expected to grow exponentially. There are a few ways to invest in solar technology to improve your finances. First, you can look for solar companies in California that offer stock options. Buying stock in them could be a great long-term investment since growth is expected in the industry. Another way to invest in solar is to install panels on your property. Although the upfront costs may be high, solar panels are still worth it because of tax incentives and reduced utility costs in the long run.
Rental Properties
California has many housing markets that are very attractive to investors. The population of renters is very strong, so if you can provide an attractive property in a desirable location, then you can make a lot of money from rental income. There are many reasons to invest in rental properties, including steady income, natural property appreciation, and diversification of your portfolio.
However, you will need to figure out a financing plan as well as management tasks since running a rental property takes a lot of work. If you took an exam prep course, passed the test, and obtained your own HVAC license from the state of California, you could save a ton of money on property upkeep costs by doing all the HVAC work yourself, which would increase your income potential with fewer expenses.
Mutual Funds
Perhaps you look at the first two options and think they are a bit too ambitious for your taste. Investing in one company is always risky, and there could be a long path to profitability if you install solar panels or buy a rental property. Mutual funds are a pretty safe method of investing because of diversification. Essentially, you put money into a mutual fund and decide how that money will be managed. Many elect to leave it up to the fund-managing staff. Then, the managers of the fund will invest the money into various assets. The more assets they are involved in, the lower the risk is to the investors. Then, when those assets increase in value, investors receive dividends from the mutual fund.
Real Estate Investment Trusts
Combine the last two investment opportunities and you have an REIT. They work much like a mutual fund in that they are managed by professionals who invest in various assets, though all these assets are related to real estate. Then, when the profits come in, the investors receive their regular payouts. An REIT is a great way to get started in the world of real estate investing, and it could teach you enough to venture out into other property investment options such as rentals.
Day Trading
If you love the idea of making quick deals and monitoring markets throughout the day, then day trading may be for you. There are tons of day-trading apps that you can set up an account with. They will let you access the stock markets where short-term trades can be made. In this strategy, the key is to buy low and sell high. When you detect a drop in the price of a certain stock, that is when you want to purchase that option. Then, later in the day if that price goes up, you sell it for a higher value and keep the profits from your sale, minus any commissions from the platform. However, use this approach with caution, as you must understand how markets work and research individual companies to make solid trades.
What Investment Opportunity in California Suits Your Financial Goals?
You should never jump into investing without clear financial goals and a plan. How much money do you want to invest and what kind of returns are you hoping for? Do you want passive income from a mutual fund or money from a very involved asset like a rental property? Figure out what you want your financial future to look like and then craft an investment strategy based on those preferences.
