There are ways to wisely invest money that are over just putting cash into an account. And there are certain steps to take.
1. Plan. In order to invest wisely you need to understand where you’re now and where you want to be. This means looking at your goals and designing investment strategies to ensure that you will reach those goals. And it includes budgeting to know where you money goes.
2. Diversify. This means not investing in one investment alone. If you invest only in one asset or type of investment you’re subject to events that may even wipe out your money. Diversifying reduces this risk as each asset class has its own business cycle. These cycles will work in opposite direction – when one is down another is up. This way your return is averaged and the volatility is reduced.
3. Pay Yourself first. You pay the landlord, the bank, the power company and so on. consider paying yourself as paying for your future income needs. Pay yourself a salary.
4. Invest for your time Frame. This goes back to your goals. If you’re saving for a new home you’re likely to wish the money within the short-term. You won’t wish to invest in equities or other investments that have volatility if this is the case. Once again if you’re investing for your retirement you’ll be looking at a longer time frame and can take on more risk.
5. think long-term. Once you begin investing don’t be tempted to look too often at your investment. it’s likely to go down and if this happens at the start you will be tempted to take the money out and miss the opportunity of growth. Long-term investment is just that. Do not treat it as if you want the money next week and then take fright when it’s down.
6. Assess Your attitude to Risk. If you find that you just can’t stand having your money losing any value you would like to look at your risk tolerance. Many of us assume we can accept our money fluctuating but when it comes to the crunch are you able to really? Realize an appropriate risk identification tool and use that to work out what kind of investor you are. The longer you’ve got till you require your money the more risk you’ll be able to accept.
7. Always put money Aside. This goes back to paying yourself first. continue to invest one thing even when times are tough. If you put money away and then pay your bills, you’ll always have something to fall back on.
8. Invest in Yourself. Increase your knowledge with study, start a business, do something you’ve always wanted to.
9. Repay Debt. While this is not a traditional investment it’s one of the best uses of your money if you’re in debt. Credit cards have high interest and also the come on any investment is unlikely to be higher. Think of it this way, if you repay a debt with an interest of 200th this is really your guaranteed come.
10. Be Patient. Your money is unlikely to grow significantly overnight so be patient. Let it grow without whipping it out just because it’s too slow for your liking. Despite what some might tell you there’s no magic investment which will return 100 pc overnight. Beware of anyone who tells you there is.
Invest wisely and you can have a comfortable and secure future.