Jumpstarting Your Way into Being an Investor
The dream is to retire as young as possible. But how can you do that if there are always bills to pay, overarching student loans, and a family that needs food on the table? Not to mention the uncertainties in the global health crisis we are all facing right now. But the way forward is to look ahead, in finding out what you can do, and doing what you can. This shift can take you many steps ahead, instead of focusing on your limitations and what you don’t have at the moment.
Here are the best ways to start:
1. Create a savings plan.
You cannot make a tree grow if you do not have the seeds to plant it. In investing, you plant your money, and that is what will grow for you. Therefore, having a good amount of savings set aside is the best way to start on your investing journey.
Make sure to create a plan that is most suitable to your lifestyle and your needs. Be strict about it. You can start with a small amount that you put away daily, weekly, or monthly. It doesn’t matter how small the amount is – it is more important to get into the habit of putting something away no matter what.
2. Draw out your dreams.
Be as specific as you can be with what you want to achieve in your life. It can be a retirement destination; a certain lifestyle; a material manifestation such as a house, any number of vehicles, a travel destination; or even a set amount of net worth. You can then work backward and plot out the steps you need to take in order to achieve these dreams.
Review these daily. This will help you make wiser financial decisions that you are faced with on a regular basis, what you spend, and what you say no to, because you know what you are working toward.
3. Educate yourself.
There are many ways to get to your dreams, and creating your investment mix is the best way to let your money start working for you. Learn about the different types of instruments you can invest in. You can start with a high-yielding deposit instrument, and then move to time deposits, mutual funds, real estate, stocks, and even dividend paying stocks.
4. Pay attention to the market performance of your instruments.
Check on the best investments, and see how you can play with your portfolio, diversifying and balancing the risks and possible returns of each one. Consult with a broker or even robo advisor that can help you choose and manipulate your holdings. Make sure you are making informed decisions and are adept with what your percentages and ratios mean. For example, if you plan to invest in stocks or dividend-paying stocks, make sure you aren’t fooled by those that seem to be promising because of market performance or high payout ratios. More often than not, stable-performing companies over a long period of time are a better gauge of what a good investment is. Here’s a list of key points you need to note as well when investing in these kinds of instruments.
It is never too late for financial literacy. No matter what age you are, if you start taking wise steps now, you will be able to reach your financial dreams in no time.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes