Have you had problems with how to invest your money? Does the investment seem too intimidating or complicated? Investing your money wisely doesn’t have to be a complicated process. All you really need is a little basic knowledge, a little patience, and wise advice to make your investments grow exponentially over your lifetime.
I am sure you have heard many incredible stories about people who invest their money in the stock market and that with the investments they have made they have made a lot of money with a small investment. The reality is that the vast majority of millionaires got there by investing their money wisely over a long period of time . Most of them use time-tested basic strategies.
Avoid high risk investment
It’s easy to get caught up in the hype of a single stock and lose all your money. The problem with individual stocks is that you are risking money in a company. If your business has a bad quarter or suddenly goes bankrupt, you can lose most or all of your investment overnight. This happens more often than you think, which is why it is the first tip to invest your money wisely.
Never invest in something you don’t understand
If you cannot clearly explain what you are investing or you do not know someone else to explain it to you, then do not invest your money with that strategy.
Invest before taxes and tax-free money first
Investing money before tax simply means that you are investing in a pension plan. Therefore, every dollar you invest in one of these accounts will be taxed as income, so you are going to save money on your income taxes now. However, you will have to pay taxes on the money you withdraw later, when your investment ends. However, when you retire and withdraw money from the account, you will not have to pay taxes on the withdrawal.
Invest about 15% of your income
Consistently investing 15% of your income every month is going to grow your wealth enormously. The money is automatically deducted from your salary and deposited directly into your investment accounts. Automatic deposit to investment accounts is absolutely the best way to have discipline when it comes to saving and investing. All you have to do is set it up and forget about it.
Don’t be too conservative
The opposite of taking too much risk (i.e. individual stocks) is being overly conservative when investing your money. Having all your money in bank deposits is a terrible way to invest your money. Yes, these investments are very safe, but they have a very low return on investment. The returns are so low that you won’t even keep up with inflation, which will actually end up losing money over time on these mediocre investments.
Seek advice from a professional
It is always good to seek wise advice on how to invest your money from a professional, such as a financial advisor or financial planner. You should look for a professional who charges a flat or hourly rate. When hiring a financial planner, you take a percentage of the money you invest as compensation to gain a huge gap in your investment returns. Ultimately, it will come at a cost in the long run. A good financial planner will have the heart of a teacher and will make sure you understand everything about where to invest your money.
Be patient with your investments
Remember that investing is a marathon, not a sprint. It is totally normal for the value of your investments to go up or down over time. But as time passes, they will almost always tend to go up in value. So be patient if your investments are not working very well at the moment.
Don’t think about your investments in terms of how you will be doing today, or the last 6 months, or last year. Think of your investments in time periods of 20-30 years or more. Taking a long-term view helps keep perspective.
Keep your Investments simple
You’ve probably seen the acronym before. Using KISS (Keep It Simple Stupid) philosophy is simply a wise investment. There are a lot of complicated investment strategies, where people will try to convince you that you can beat the market. But, It hardly ever works. Even If it works, it doesn’t work for long.
The best investment strategies are very boring, but they work perfectly. The simplest method is to invest in mutual funds that match the returns of the market as a whole. Another simple strategy is to invest equal amounts in mutual funds that cover the 4 different categories:
- Conservative
- Moderate
- Aggressive
- International
Check the fees
Investment rates can be very high if you are not careful. There are several fees to take into account:
Transaction: The fee charged each time you buy or sell shares in an investment. These fees are generally quite low.
Some mutual funds charge a fee as high as 5-6% of the total amount invested to purchase shares in that mutual fund.
Annual: A fee charged each year is owning shares in a mutual fund. These investment rates have a very wide range from as little as 0.2% to as high as 5-6%.
The fees can be very insidious. Every time you pay an investment fee, it is money that you cannot invest and never has a chance to grow. Obviously, the more investment rates you pay, the more investment growth you give up in the long run. High fees can literally cost you tens to hundreds of thousands of dollars in investment returns over your lifetime.
Keep your emotions out
TV shows and the Internet like to present investing your money as an exciting, fast-paced game with frequent operations. The reality is that a good investment is actually very boring.
Don’t check your investments every day. For the rest, don’t check every week or every month. Maybe check back once every quarter. When you constantly check your investments and see the day-to-day movements in price, it is too easy to get your emotions involved. They end up making poor investment decisions based on an emotional response.
Be debt free
If you don’t have any debt, you have more money to invest. The more money you invest, the more opportunity you have to invest your money wisely, so in the first place, pay back all the loans and credits you have, which are much more expensive than investing your money.
Investing your money doesn’t have to be complicated
Most people think of investing as a complicated process that they will never understand. But if you learn the basics and stick to them, investing your money is going to be a much easier (and more rewarding) task than you ever thought it could be.
you have the best ways to obtain profitability for your money through safe financial products such as bank deposits, or through the possibility of investing your money in the stock markets. Check the products that offer you the best profitability and get extra money.
