Is this Your First Time to Invest? Here are 5 Complete Money Saving Tips You Need to Know
It’s certainly possible to make it through life
comfortably with nothing more than the wages or salary from your job. However,
it is also possible to get wealthy through saving as much money as
possible by placing it in investments like stocks, bonds, gold, silver, and
derivatives. If you’re seriously thinking about upping your saving and
investing skills, follow these tips:
Figure Out Why You’re Investing Now
Know the reason why you want to invest. Are you
financially able and ready? Is it the best time to invest? Before you do anything, make sure all your
debts are paid off. You can’t build your nest egg because the interest rates of
the loans you are still paying may even be bigger than the amount you will earn
from your investment.
Once you decide to move forward with your plans
to invest, make sure adjust the risk levels you’re willing to take on, so you
have more chances of making money in the long run.
Don’t Move Your Investments Around Too Often
People who constantly watch over their investments and actively trade them are known as active investors, who often do significantly less well than their counterparts. Even if you have an innovative mobile app that lets you trade whenever you want, refrain from doing so if you want to make good investing decisions. This is because cognitive biases often interfere in an investor’s decision-making processes when actively managing investments. You can also use resources like Stocks for the long run by Jeremy Siegel to help you make wise long term investment decisions.
A statistic from the trusted web-based financial
education source Investopedia indicates that investments that were actively managed in the past
year didn’t do as well as passive funds, which are those that are left without
engaging in trades for years at a time.
Compound Interest Will Kill Your Dreams of Full-Fledged Investments
The larger outstanding debt balances get, the
more they grow each billing period through the power of compound interest. If you fail to do this, you’ll end up losing
money on your investment due to its growth being significantly outpaced by its
Never Store Excess Cash Where It Doesn’t Earn Money
You always need to put your money into interests
that will ultimately bring you money. If you don’t do so, you are effectively
losing money because you are not taking advantage of the power of interest growth. For example,
if you’ve got the cash that you are not currently planning on spending, pour it
into a savings account. Even though it won’t earn much return in a savings
account, for example, it’s a lot better than nothing.
Have an Emergency Fund, Too, Before Investing
You need to be able to pay off three to six
months’ expenses if you and the rest of money-makers in your household found
themselves out of work and unable to get any money whatsoever. This amount of
money is known as an emergency fund. Make sure to have a fully-fledged emergency fund before going
forward with investments.