Investing & saving
A case can easily be made that no one is a born investor or wealth Preserver. Every investor or a prudent person of wealth has to begin from the beginning. Investing and saving thus have very humble beginnings, indeed. And the only way to go is up.
It will be few and far between that you will chance upon a person wealthy thru no effort on his own part. How many do you know that we’re born with a silver spoon? Or had wealth bequeathed to their courtesy and aunt? Not all businesses hit it off with good fortune from the word go!
Though it may seem very daunting and challenging to a mere Starter, the truth is that even folk of modest means manage to get to that mature stage in their developmental journey when they have reached financial stability. If they can succeed in this manner, so can you.
The financial success mantra
- Come up with a financial plan.
- Pay off all high-interest debts.
- As soon as you have paid off debts, start saving and investing.
- Constructing financial plans.
Why do you wish to save and invest at all?
- A car;
- A home;
- An education;
- A cozy retirement;
- Your children;
- Medical/other emergencies;
- Unemployment periods;
- Caring for parents.
Determine the number of years you have to meet each particular goal since you need to find savings/investment options that are compatible with your time frame for meeting each goal.
Be aware of own current financial situation
Analyse your own current financial situation. Like every journey started, and every destination reached, you need to know where you are coming from. You ought to have a proper representation of what you owe and what you owe. Come up with a net worth statement. Be sure about your assets and liabilities. Minus the liabilities from your assets, and you have a positive net worth in case your assets are larger than your liabilities. In the event of your liabilities being greater than your assets, you have a negative net worth.
You will be updating your net worth statement every year to keep track of your own progress. Don’t despair if you have a negative net worth. If you have a positive plan for gaining a positive net worth, You are doing alright!
Awareness of income and expenses
Obviously, you must keep track of your income and expenditures each and every month.
Pay yourself and your family first
If you permit your bank to automatically remove money from your paycheck, deposit it into a savings/investment account. An even better way of obtaining better results is through participation in an employer-sponsored retirement plan. These plans will generally not only deduct money from your paycheck of their own initiative. There will be a simultaneous reduction in your payable taxes. In not a few such plans, your contributions are matched in part sometimes, in full, by your employer. That’s what is called ‘free money. Whenever you have automatic deductions made from your account or paycheck, you will add to your chances.
Funds to save/invest
If due to whatever circumstances, you have only expenses and next to no savings, you will have to look for ways to save money. Unnecessary expenses that you manage to save, you will observe, add up to a not-insignificant sum over a year.
Dealing with high-interest debt
Simply paying off high-interest debt is a great investment strategy. Maxing out credit cards is a bad habit. The majority of credit cards charge high-interest rates, in case you are unable to pay off your balance in full per month. Close to no investment will give you the high returns you will need to keep in sync with an 18 per cent interest charge.
Get money to work for you
There exist in the main two ways to make money
- You work for money;
- The money works for you.
- You work for money -You work for someone and he pays you money, or you have your own up and running business. ;
- The money works for you – You have an active interest in saving or investing.
It takes money to make money, or money attracts money. Your money may have a regular income if it goes to work. Someone makes a regular payment to make use of your money. This regular payment is ‘interest’. If you are a shareholder, the company may pay you dividends, or a part of its earnings over a period of time.
You could scout around, find something that you can buy so that that; valuable’ ma start earning for you. A piece of real estate, depending on the location and a handful of critical parameters, can really be a sort of mini-goldmine.
Saving vs investing: a differentiation
Your money is put into a place where it is safe, and you may also have access to it at any point in time. Among savings, products may be numbered checking accounts, savings accounts, and deposit certificates. The longer you can keep the amount in the product undisturbed, the more steadily the product will earn for you. However, most savings products cannot keep up with inflation, so it begins to make sense to scout around for investment opportunities.
It is wise to have a couple of savings products that have your back, always. Investing is, among other things, also a ploy to take on inflation. Investing has oftentimes a chance of losses. Chances of success in making a profit out of your investment are always contingent upon your following certain rules of some specific investing game. There’s a risk of loss of upto 100% with bonds, stocks, or mutual funds. Conversely, if the strategies employed hit all the right notes, you may even make a killing. Diversification is recommended, for even if a couple of investment products sink, the others won’t. Hereby you spread the risk so that you don’t hurt too much when there’s an unexpected loss.
Investing in instruments so that they keep earning for you is a time-consuming process. How long you would like to keep the investment product making money for you, would depend on when, per your investment goal, you think you would need the money. You have to keep stock exchange instruments undisturbed for up to 2 decades, to expect a really handsome return. Selling your investment when the market’s down is the worst-case scenario. If you hire investment professionals to manage your diversified portfolio for you, you have to keep a tight leash on them, asking them periodic questions as you monitor your investment at least four times each year, per your investment goals. Feel free to ask the advisors questions. Investing is necessarily the next step in evolution, following your savings products. More investment products signify more financial maturity on your part. Always do business with regulated, authorised and registered entities only!