You’re an investor whether you know it or not. You just might not have made any big investments yet. Investment is about allocating resources. Many resources in your life are not money. You’ve got your time (the big one!), your health, your emotions, your friendships, and a bunch of other areas of your life that you can either cultivate or neglect.
Some people seem to make consistently good choices. For others, their choices are something of a grab bag. Good choices are the secret of the successful financial investor. If you’ve figured out how to pick out the best situations for yourself in your regular life, you’ll be a natural investor.
But plenty of sensible people stay to the sidelines of investment. More than half of Americans never invest in the stock market. That’s a sad thing because investment on this scale is how people acquire security for themselves in the long term.
It’s hard to get there with just savings. Savings lose value over time because of inflation. Inflation pulls the value out of money over time. So your $1000 today won’t be able to buy as much ten years from now (unless the world goes all topsy turvy).
(Related – How to be rich by saving 1 hour of wage)
Investments risk your money, but they also stand to gain you a lot more, preserving and increasing the buying power of the original investment. So if you haven’t realized it until now, admit it, you want to be an investor.
You, like a lot of would-be investors, may be intimidated about getting started. Investment seems so big and complicated and varied. It seems like the realm of smart people with expensive educations and lots of experience under their belts. It’s true that investing can get complicated. But it definitely doesn’t need to start out that way. I’ve got some recommendations for basic investments that I think will work out for you just fine.
Extreme Long Term Investment
This one, in particular, I am interested in. I am talking about rental properties, residential or commercial. We don’t yet have the money to buy a rental property, as we just started with our first mortgage. Eventually, we would buy one rental apartment and go from there.
Rental properties are almost risk-free unless we go back to an economic condition of 2007/2008. Especially if you buy properties in a good location, you’ll get tenants year-round to pay off your mortgage and hand you some extra money every month.
Long term investments
Every portfolio has investments meant to mature over years and decades. For the beginner, these will be based on stocks and bonds in the form of mutual funds and ETFs. These grouped stocks and bonds have a much better chance of succeeding (and a lower chance of failing) that individual stocks, which rise and fall whimsically all the time.
These funds swap out stocks as they become more relevant to your interests, and this is almost always done for you. So you don’t have to worry about know-how so much. You just have to pick the right funds. Most major brokers, like Vanguard, T RowePrice, Fidelity, Merill Lynch has many.
Short Term Investments
My favorite short term investment is Forex trading. As it’s arguably less risky than trading stocks or other commodities. Forex is really fast paced, allowing you to invest based on your guesses about the future values of currencies and other financial entities.
If you guess growth or loss correctly, you earn dividends in proportion to how much the value went in your prognosticated direction. It’s not easy but it’s not hard either. With experience, you can get really good at it and make a lot of money fast. You can also lose money fast, which is why this has never been more than a hobby for me. But I generally do better than not, and you can too.
Whichever strategy you want to investment in, you’ll need to take care of some basic laws of investment, like
- Start investing from today, and start with whatever amount you have saved
- Make your investment in auto pilot, like send a portion of your paycheck directly into an investment account.
- Do not put all your money in one investment
- Do not run behind better return if you can’t take too much risk
- Always ask for help, ask for expert opinion. better, talk to a financial planner (The only investment planner I talked to were guys from Personal Capital. I received three free consultations along with free personal capital account. Here’s my complete review of the tool)
- Initially do not pick individual stocks, unless you’re already an expert.
- Do not borrow money to invest
- At least target to beat the inflation at first.
You can refer to my other post, 20 investment strategies for beginners, for a complete listing.
Readers, if you’re not investing, let the investor in you awakens. Let your money earn more money, even when you are asleep.
So many people say that investing in the stock market is like gambling which couldn’t be further from the truth. Knowledge is power and by spending some time learning about investing, putting money in stocks isn’t as daunting and risky as it might first seem. I also think that not taking risk is a risk in itself.
As you mention in this article, we want to earn at least enough to beat inflation so that we don’t lose purchasing power with our investments. Many people don’t realize that by putting money in “safe” investments like term deposits or money market funds, they might be earning some interest, but if they take into consider interest and taxes they’re losing purchasing power. That’s why it’s important to invest at least some money in the stock market to have some growth (hopefully enough for retirement or financial freedom) for the future.
Agree to what you said. Just like to add that, trading in stocks is risky. But long term buy and hold approach has very low risk. Most of the market rich people played the buy and hold strategy, isn’t it?