So, you finally paid all of your debts which accumulated throughout the years. After following your debt and saving plan, you’re now debt-free and have funds for emergencies lying in the bank. Wondering what’s the next step to do? The obvious answer is to make sure your hard-earned money grows for you. Its time to venture into investing and how to make your money grow even while you’re sleeping.
Investing seems like a daunting process for first-time investors who don’t have the experience in building portfolios. After all, one wrong move and your hard-earned money can be wiped out in an instant. But the opposite is also true. One smart move in an investment can make your money grow more than what it gains as interest if you put it in a bank. If you’re a first-time investor, here are the tips which you can use to jumpstart your investing journey.
Start Investing As Soon As You Can
Whether it is on your own with stocks or with other people in a mutual fund, you should start investing as soon as you can. The earlier you start, the more profit your money can accumulate over time. If you are disciplined in your money, you can start investing as soon as possible. However, it is recommended to get debt-free first before you start investing to avoid conflict of financial goals.
Diversify Your Portfolio With Different Kinds Of Investments
There is a saying that almost every investor knows, “Don’t put your all your eggs in one basket.” Diversifying a portfolio is an essential part of a successful investment plan. An example of this is when you decided to put all your investment fund in real estate. What if the same crisis that happened a decade ago happened once again? All your investment money was gone in an instant. Consider investing in things such as foreign currencies like the Iraqi dinar. The IQD recently reached one of its highest point in history, and it is expected that the Iraqi dinar revalue will finally happen in the near future.
Pursue Investments That Makes Sense
Only pursue investments that you can understand. If you can’t explain it in a few sentences or if you are not sure how the money grows, consider investing in a simpler investment. For example, the stock market is one of the most common investment machines in the world. However, it doesn’t mean that you can invest in stocks just because everyone’s doing it. Understand the stock market first before venturing into it. Make sure to do your homework and understand the fundamental basics to avoid bad decisions.
Minimize Taxes If Possible
It is a good idea to build a habit of minimizing your taxes even if you’re just starting your investment plans. Taxes will follow you even in your investment journey. At first, a few dollars in tax for the transaction is fine. You can recoupe the tax paid after your investment hits the roof. But what if it doesn’t?
Even pennies, when accumulated, can become a sizeable amount of money. The more you save in taxes, the more your money can work for you. Be sure to check your tax laws and try to find opportunities that can minimize your tax expenditures. Don’t even try to think of cheating your tax obligation. It will come back at you at full force in the future.
Set Up Both Short And Long Term Financial Goals
What is the reason you’re investing? Are you investing to earn money as fast as possible or you just want a safe place for your money while making sure that it will also grow? In investing, you can be a short-term investor or a long term investor. This decision will be based on both your short term and long term plans. Take note that you can do both at the same time, but it would require a lot of serious effort.
Automate Your Investment And Stay Disciplined
Last but not least, an investment is only effective if you make it a habit and invest continuously. The reason why investing continuously is a good idea is because the more you invest, the faster your money can grow. To make sure that you will continuously invest on a regular basis, set automation in your investment. Contact your bank and ask if they offer automatic transfer to your broker account.