How do you invest money wisely? We know that you are focused on investing your money with a purpose beyond investment returns. When you are seeking ways to invest, we support you with a wide array of strategies including resources and tools to help you achieve your goals. Whether you are saving for retirement, a loved one’s education, or have other objectives in mind, we know you are interested in investing money wisely to build your future.
There are hundreds of ways to invest money wisely. Sales pitches from stock brokers abound, as do articles and websites devoted to investments, many written or sponsored by companies that sell investment products. All of this advice can be confusing and contradictory.
Everyone reaches a point in their life when they start to consider their financial future. Whether your aim is to buy a car, a home, or support a family, investing wisely is important because it provides long lasting financial stability. Investing money in a way that fits your personal goals and needs is not a difficult thing to do, even if you have no background in personal finance or even basic investment strategy. There are simple ways that you can put your money to work for you using a variety of easy to comprehend investment options.
How To Invest Your Money Wisely
Never invest without a plan! Do not panic and sell when markets drop and do not get overjoyed and buy when stocks are rising. Sell because you achieved a certain profit or the company is losing its edge. Buy because you believe the company has value and will gain value over time because of good management and great products.
Irregular and Discretionary Expenses
These include things like buying furniture and consumer durables, valuables like gold or going on a holiday. Since these cost a lot, one must plan intelligently. For example, while buying furniture, do a price-value analysis to determine the quality and place from where to buy. These days various payment options are available-cash discount, zero-interest EMIs, etc.
Pay yourself first. Set aside as much of each paycheck as you can for investing, no less than 10 percent of your income. Do this even if you can devote only a few dollars at first. Even $5 per week will add up over time. Try to cut your costs of living. Don’t leave yourself of necessities, but try to cut out luxuries, anything you don’t have to have. Some of the wealthiest people in the world lived carefully when they first became serious about increasing wealth.
If your employer offers direct deposit, consider sending a portion of each paycheck directly to your savings or investment account. If you never see that money, you won’t be tempted to spend it.
Discipline yourself to build up your emergency fund to six months’ worth of living expenses. You should also pay off any high-interest debt you’re carrying. This is especially important in the likely event that the interest rate you’re paying on such debt exceeds the interest rate you could expect to earn with your investments wisely.
Diversify Your Investments
Usually, the best long-term plan is to divide your money among several categories of well-researched and thought-out investments (for example, stock mutual funds, bond funds, and money market funds), each of which charges comparatively low fees and is likely to grow somewhat faster than the rate of rise. Within each category, further diversify your holdings among several investments.
Invest in something you are willing to learn through
Life is a teacher; the more we live, the more we learn. The only thing constant in life is change and in the world of investing; such change occur very rapidly. Now how do you stay in control when the tidal wave of change comes? How can your investment wisely to stay relevant in times of change? The answer lies in continuous learning. Investing is like a rapidly flowing river and to stay on course; you have to be on the edge, ever ready to learn.
Invest in something you have control over
Control is one of the most important principles every successful investor looks out for in an investment. Never lose control of your investment because control is essential to risk management. The reason I chose building a business as my best investment opportunity is because it can increase your sales, control your cash flow, adjust your liquidity ratio, and sell the business or hold. It equally knows the necessary buttons to press to increase the value of your business if ever you decide to sell. That’s the power of control. I know a lot of investors who have conceded their power of control to stockbrokers, fund managers, financial advisers and analysts.
I feel the most important to cross check before sinking your hard earned cash into any investment. Never fall in love with an investment opportunity without first considering these factors because they are fundamental to sound investing and wealth building. Ignore them at your own risk.
The important aspect of investing cash is your ability to access it. Most money market accounts and even savings accounts give you the ability to access your cash with 24 hours. Make sure that your cash is at least accessible within 48–72 hours, if you were to need it.
Don’t believe everything you hear or read
Sellers and real estate agents ultimately want you to buy that property. So what they tell you is most likely the rosy situation, not the actual situation.
If the property has been a rental, ask the seller if you can see a breakdown of his actual returns that he put on his tax return. It’ll show his ACTUAL revenue and expenses, or at least the ones he reported to the government. What you can expect to earn is somewhere between what he reported to the SARS and what he’s promising you.
Now you’ve got some money behind you, outsource the skills that don’t come naturally to you. Focus on what you’re good at rather than trying to be a jack-of-all-trades and master of none. If nothing else, it will come as a relief to your business partner as you mess up yet another spreadsheet! But never outsource your marketing department. Marketing is critical to growth and should be in-house so that it can influence and drive development.
When you invest money wisely, its becomes more easy to grow a more profitable investment portfolio that can create future income through growth. Lets look at some of the places you can invest your money in wisely.
Where To Invest Your Money Wisely
Stock market is one of the places where you invest wisely. Look for investments that will give you long-term growth without taking undue risk. If you are a young worker just starting out, the stock market is probably your best bet. Even though the stock market is lying to wild swings, over the long term it can also produce some excellent returns.
Investing in bonds means that you are basically lending money to a municipality, the government, a corporation, or a federal agency In return, you are given a promise, or “bond”, that they will pay you a set amount of interest throughout the life of the loan, and also repay the principle of the bond at the end of this term. Bonds usually pay interest semiannually so they can be considered a solid source of income or savings. This form of wisely investing is considered fairly low risk, and it also carries with it a rate of return slightly higher than you will find with a bank, but lower than stocks because there is less risk involved.
One of the best ways to capture that growth while spreading out your risk is to use a low-cost mutual fund that is widely diversified. Mutual funds hold many different stocks instead of just a few, which helps to reduce the risks inherent in the stock market.
Mutual funds offer easy investment diversity by allowing you to join up with hundreds or thousands of other people to invest in a portfolio of real estate, stocks, bonds, and other securities. There are thousands of different types of mutual funds ranging from technology and health care to socially responsible funds that do not invest money in companies that deal with tobacco, firearms, alcohol, etc. The great thing about mutual funds is that you can research and choose a specific fund that suits your own investing needs. These funds also only require small initial investments, usually a few hundred or few thousand dollars. Mutual funds provide stable growth without the volatility of stocks. Investment return rates are slightly less than that of stocks, but larger than bonds, again this is directly related to the amount of risk involved with the investment.