Investing your money is a truly helpful venture for everyone, especially if you want to live a happy and peaceful life, worrying less about the bills and taxes to be paid. Investment strategies can really be easy.
Investing, aside from being an avenue for financial freedom and building wealth, will make your long-term financial goals such as retirement achievable.
To every investment, there is only one constant – money. Never run out of it. How is that for an investment strategy?
Anyone at any age who wants to be financially stable needs to earn income and save regularly.
Equity investment is a good choice if you want to become a part-owner of a company. It yields dividends, which are profit allocated for stock/equity investor. Although volatile, equity investments can cope up during inflation as it reduces risks with solid asset allocation strategies, especially when mixed with good investments.
Corporate bonds are the top choice for people who have good financial leverage and are not afraid to take big risks. The upside – the yield is higher as compared to government bonds. The flipside, however, is it has a higher risk of default, reduction of value due to inflation, depressed prices due to issuance of new bonds, among others. On the other hand, one may opt for government bonds, which, in theory, has relatively less risk since the government can create ways such as increasing the taxes or creating additional currency to pay off the bond from maturity, although the yield is usually less than that of the corporate bonds. Both types of bonds provide constant income stream.
If you want to invest your money but you do not have the time or experience, it is safest to invest on mutual funds, which is a mix of stocks and bonds which is managed by a professional; and because the mutual fund is liquid, you can opt to convert it into cash whenever you want.
Other alternatives are Real Estates, ForEx, CDs, etc. Whichever investment strategy you choose, the best thing to do is to know what the approach is and the market, weigh the risks and the benefits, and know how much risk are you willing and able to take.
What are some things to remember before investing for the kind of financial stability that you always wanted?
Arrange your finances carefully.
Before anything else, make sure that your budget and saving is well-organized, consistent, and followed. And pay off all your debts and credit card charges in order to start fresh and clear.
An early bird catches worms. As mentioned earlier, the earlier you are to invest, the more time it is to be in your favor. You can always balance your goals at a younger age than when you are older since you still have the power to prevent or recover losses over time in your investments. And one more thing, waiting can cost a lot of money.
In ensuring that you put your money in a certain investment, make sure to do your part by researching. Having enough knowledge about a stock, mutual fund, annuity, etc. will make you choose right one and over time avoid losses.
Investments should be diverse
Have a good mix of investments. For e.g. a mix of stock and bonds that which can help automate your investments at a low cost; which you will also need to overcome diverse effects of inflation.
Do not invest by emotion.
Do not let your fear or love for a certain investment’s promises ruin your funds. If you see visible that you are not gaining, pull it out.
Maintain your cash savings.
Understand that investing is not saving, but it is merely an avenue for you to earn that which you can save. Maintain a cash savings account for your short-term needs since investments are for long-term goals and buildings.
Of course, you will need cash to seal that hole in your roof today, but what your investment gains do will renovate your roofing years from now. That’s the difference.
It is recommended to have at least $1000 emergency savings (for starters) for surprise expenses aside from the amount of money you have invested.
Bottom line, you have the choice when to start investing to either Individual Retirement Accounts (IRA), 401K/403B contribution plans, mutual funds, stocks, real estate, corporate bonds in order to achieve whatever goals you have as you age and for your retirement.
Gains may depend on how much you put in a certain investment in a period of time. But always keep in mind that in preparing yourself for gains, you should always take a measured risk.
A very applicable way to reduce your anxiety of risks existing in market investing is to make sure you have sufficient cash savings or you can sometimes convert your investment returns into cash for immediate purposes.
To every investment, there should be another constant – your ability to have a control over your money. Diversify your portfolio and never cease that power.