If you are the kind to set up resolutions by now you already have them written down. Investing your money should definitely be one of them. It allows for you to achieve your financial goals and enrich your life.
Investing is the act of allocating money with the expectation of generating an income or profit. You may collect rent from properties you’ve leased out, dividends from shares or interest from bonds. Through this, you can build on your retirement nest for a more comfortable life.
Here are some tips to help you, as you plan to invest your money:
Pay off debt
You could be wondering why we need to tackle debt, while our major focus should be investing! Debt can curtail the plans you have laid down towards investing your money. You might spend a big portion of your income servicing loans and thereafter remain with nothing to invest. The debt we are focusing on, is the kind you take to fuel your wants; like getting the latest phone on credit.
Taking a loan to invest is rather different, with the vision that the investment will pay off the loan.
Create an emergency fund
Set money aside for at least 3 months. This money should be able to cover your expenses for some time in the eventuality your income stream reduces or comes to a sudden halt. Also, it should cater for any unforeseen events like sudden hospital bills.
The trick is, when setting money aside for an emergency fund, put your money in a high yielding savings account which will earn higher interests than a checking account.
Having an emergency fund will help you focus on your investment goals amidst the shake ups.
Invest your money as early as now
With each passing day, putting off to invest your money makes you miss out on an opportunity to grow your money. For most people the fear to make mistakes is one of their greatest hindrances, but the only way to get good at it is to start.
Time is of essence when it comes to investing your money but the longer you wait to start, the more you deny the power of compounding interest.
Have a clear goal
Investing is more manageable when you have a goal. Write down your goals and how much money you will need to achieve them. It is important to classify them as short-, medium- and long-term goals. Investing your money based on your goals will help you to grow your money and achieve your goals quickly.
Learn the investing basics
It is important to go at it with the right information. Intentionally seeking out professional advise will enable you to be equipped as you start out your investment journey. A financial advisor will help you navigate through the different decisions and options regarding investing.
Investment is a risk in itself and not being well equipped is a recipe for disaster.
Create an investment plan
A plan will help you to reach your goals at ease. It is important to have SMART goals to help you monitor your progress. The goals should be Specific, Measurable, Achievable, Realistic, and Timely. It is also helpful to know the amount of money you need to reach your investment goals.
Decide what investment type to make
There are many investment options. Once you have learnt the basics and you have a plan coming up with a decision should not be so hard. You can engage a financial advisor to help you understand the:
- Current economy state
- Best options based on your budget
- Risks involved
Investments may include real estate, stock market, bonds, pension. It will all depend on the money you are willing to set aside and goals.
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Conclusion
People invest their money for different reasons. Some for financial independence, financial security or building wealth. Whatever the reason, make it a priority to invest your money. Make your money work for you!