Investing can be the most effective way to maximize your assets and build up your capital. Of course, successful growth depends on your ability to make the right investments, at the right time. By thinking strategically and making savvy choices, investing could be an effective way for you to significantly increase your wealth.
If you’re eager to build up a portfolio or you want to capitalize on the opportunities that are currently available, take a look at these signs and see whether you’re ready to start investing:
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You don’t have high interest debts
Although good investments can offer relatively high returns, they won’t be as high as the interest on some debts. If you have unpaid credit card debt or outstanding payday loans, for example, you’ll want to clear these before you begin investing your money elsewhere. With these types of debts typically charging interest of 20% and higher, the losses you’ll accrue by leaving them unpaid will exceed any gains you make from investing your money. By focusing on your high interest debts first, you can ensure that the subsequent profits you make via investing aren’t outweighed by any unrelated losses.
You’ve got access to specialist advice
Unless you have experience with making investments, you’ll want to seek advice from an independent advisor or broker. Gaining specialist advice will give you the fast-track on what investment opportunities to look out for and whether they’re right for you. From following the Ant Financial IPO to assessing currency movements on the FOREX market, an experienced trader can provide you the information and knowledge you need. Following the markets requires vigilance and ad hoc investors rarely have the time needed to keep up to date with real-time fluctuations. Finding a trader or broker you trust could be the gateway to making successful short and long-term investments.
You have an emergency fund
Although investing can be a great way to boost your assets, you don’t want to use up all your funds. Investments can go down, as well as up, and long-term investing might mean your cash is tied up for some time. Due to this, it’s essential to have a separate emergency fund you can access, as and when you need it. In most cases, it’s advisable to start setting some money aside before you actually start trading or making investments. This will give you the opportunity to ensure you have any extra cash you might need and will make the process of investing your capital far more enjoyable.
How to Invest
Learning how to invest takes time, so be prepared to put some effort in when it comes to research which type of investments are right for you. Remember – you may be charged brokerage fees, depending on what investments you make, so be sure to factor these in when you’re assessing the potential gains an investment opportunity offers. By researching the markets and learning from professional traders, you can access all the information you need before you make your first investment.
If you want your money to grow faster than simply holding it in a savings account (where it will hardly get 1% growth each year) you need to look into investing. Investing is a very wide and arching term and there are investments of all different shapes and sizes, so there is almost surely something you will be interested in.
However, unlike keeping money in a checking or savings account, investing your money in the market comes with some inherent risk. Some investments come will more risk than others, but there is no such thing as a legitimate and 100% “risk-free” investment.
As a result, you need to educate yourself before you ever put your money at risk by investing. This article is going to take a look at a few important things to know before you dive into the world of investing.
What is Your Risk Tolerance?
Before investing any money at all, you need to be aware of what your risk tolerance is. Some people will be okay with a ton of risk for the chance at a lot of reward, while others will prefer to limit risk while still growing their money faster than in a savings account. The risk tolerance you have will determine what you invest in.
If you are not inherently aware of your risk tolerance automatically, don’t worry. There are quizzes and calculators online that will help you be able to determine your risk tolerance in only a few short steps or by you answering a few questions. Once you know your tolerance, you will know where you should be able to comfortably invest.
How Good Are You At Saving Money?
In order to have enough money to invest, you need to be able to save money. Without any saved money, investing becomes much riskier as it is all you have. Of course, saving money is important if you want to accelerate your savings, but it can also be important to your investments as well.
If you are good at saving money, you will likely feel comfortable enough to invest some of it, as you know you will be able to just save some more if your investment doesn’t go well. But if saving money isn’t your strong suit, you might be a little bit hesitant to put money at risk, knowing how long saving that money up again will take.
What Do You Want to Invest In?
Once you know your risk tolerance and that you are capable of saving up enough to invest, it’s time to figure out what you want to invest in. As mentioned before, there are a ton of different types and kind of investments to choose from, and there is no need to limit yourself to one of them, either.
If you want to take a little bit less risk, you can invest in things like bonds or index funds, which will see a decent amount of growth, without putting your money in a ton of risk. If you like to take huge risks, investing in cryptocurrency or individual stocks might be the option for you.
So while your risk tolerance will help determine what you want to invest in, ultimately, you will make the decision. Also, each investment type may have a different “fee” attached to it (such as a management fee or a transaction fee) so always consider fees when investing, as well.
Hopefully this article has cleared some things up for you and has made it easier to begin investing. While many people do it, investing is potentially risky and as a result, you need to be careful and educate yourself as much as possible beforehand.
Nearly half of Americans don’t have enough money saved for retirement. There are many reasons for not being able to save money; emergency expenses, not making enough to cover basic necessities, high health care bills and so on.
No matter the reason, if you find yourself without retirement savings in your late ’40s, ’50s or beyond, believe it or not, there’s still hope.
It might not feel like it, but there are things you can do if you start now. Keep reading for some tips and tricks on how to start investing. It’s never too late.
Investing in stocks can be tricky if you’re well informed! Read more to learn everything you need to know about stock shares and investing all in one place!
The top wealthiest Americans get 35 percent of their income from investments. For those hoping to build wealth, entering the stock market is a no-brainer.
The world of stock shares and investing may seem intimidating or confusing to an outsider. There are many elements that go into learning how to be a smart investor.
Luckily, there are a few basic things every beginner can learn to jump-start their portfolio.
Here’s your introductory guide to investing in the stock market.
Stock Market Basics
Before you begin investing, you’ll need to know the basics of what a stock is and how it all works.
A stock represents legal ownership in a business. There are two types of stocks: common and preferred. Most individuals invest using common stocks. These entitle you to a company’s profits and losses.
Companies use stocks to raise capital and grow their business. Investors make money on stocks by buying individuals shares. The prices of shares depend on how a business divides their common stock.
You can buy stocks in several different ways. You may want to buy an individual stock. In this case, you buy single shares to build your portfolio.
You may also decide to invest in stock mutual funds or exchange-traded funds. Mutual funds allow you to buy small stocks for a variety of different companies. For this, you will make only a single transaction.
Strategy and Planning
Now that you’ve got the standard definitions, you’ll need to decide your investment strategy.
Many people opt to invest on their own and handle their own portfolio. In this case, you’ll plan and choose shares on your own. For help with investing, check out this stocks investment guide.
You may decide you want help when it comes to investing. To do this, you’ll need to hire a stockbroker who will navigate the stock market with you and help you choose shares.
To get started investing with a broker, you’ll most likely have to open a brokerage account.
Budgeting
Before you begin investing, make sure to plan out your budget according to what you’re willing to invest. Your budget will depend, of course, on how much your shares are worth. But in general, it’s best to decide how much money you have available to invest.
Investing
It’s time to invest. If you’re buying individual shares, the most important aspect of this is choosing your stocks. This will require research.
The thing to keep in mind when choosing is any given company’s potential for growth. Many people decide to invest in start-ups or other brand new companies for this reason.
For beginners, low-cost investments are best. These will give you a feel for how the market works. Investing in funds is a great low-risk way to get your feet wet with stocks.
Learn More About Stock Shares and Investing
You have all the basics you need for investing in stock shares and the stock market. Now it’s time to get started.
To learn more about stocks and investing, be sure to check out our investing section.
The Hard Truth
The truth of the matter is, it’s not ideal to start investing this late in the game. But not ideal does not mean impossible. It won’t be easy, but if you start playing catch up now, financial independence is not out of reach.
The first step is to start trimming the fat. You need a bit of money saved up to start investing, so that’s the first thing to tackle. Get some money in that savings account.
Assess your current situation. If you can downsize, do it. If there’s a side-hustle that can start making you some extra money, get started. If there’s an old car in the garage that you never use, sell it.
This might be hard to hear. But if you haven’t already, don’t worry so much about sending your kids to college. They have the advantage of time on their side and are able to take out low-interest student loans.
It’s becoming less and less common for parents to fully pay for their children’s post-secondary education. If it’s going to wind up eating into your retirement fund, your kids will understand.
If you’re not contributing to a 401(k) through your employer. Ask them (and yourself) why not. Most employers offer the setup of a 401(k) and some will even match your contributions.
The Numbers
The maximum amount you’re legally allowed to contribute annually to a 401(k) is $17,000. That’s savings of just over $1400 a month. If you’re on a $45,000 salary that would work out to being roughly half of your monthly take-home.
While it might seem unfeasible to save half of your income, consider this. $17,000 per year at a 7% return over 15 years would turn into $1 million.
While a million does seem like a lot of money, experts say it’s roughly the amount you’ll need to live comfortably after retirement. Assuming you have no pension or other income streams working in your favor.
This is based on the 3 to 4 percent rule. Experts recommend using 3 to 4 percent of your investment portfolio each year after retirement. $1 million in the bank, spending $30,000 per year will buy you 33.33 years after retirement. That takes you from 65 to 98. Not bad.
We casually mentioned a 7% return. This won’t happen in a regular savings account. You’ll have to read up and become savvy in mutual funds and diversified portfolios. Hire a financial advisor if you can, it will help to get your head around it.
$17,000 a year invested in diversified portfolios and mutual funds when done right, can you get that sweet 7% return and have you laughing all the way to the bank. Do your research and get more details about the right trading options for you.
If there’s no way you can manage $17,000 a year, take a serious look at your finances and figure out what you can manage. It might mean skipping the annual vacation for a few years, but your future self will thank you.
The Takeaway: Start Investing NOW
No matter your age, the best advice out there is to start investing now. Every month that passes is an opportunity lost. Hire an investment specialist or do the research yourself.
Diversified portfolios and mutual funds could be your saving grace. Check out our blog for more tips and information on how to invest wisely in 2019. And best of luck to you.