Money makes the world go round, and there’s no denying that. You can be a commie about it, but let’s be real: when you go to the grocery store, you need money to buy things, don’t you? And the good thing is anyone can learn the secret of making money. Once you know this, you can redouble your wealth every six months. So, why not learn how to make it? Let’s dive into the common fear that often holds people back from investing: the fear of financial loss, which is entirely reasonable. After all, when we work hard, the thought of losing our hard-earned money can be unsettling. It’s no wonder many of us choose to stash our cash bank accounts.
Why Should You Invest?
The age-old debate of saving versus investing is frequent in financial discussions. The money we deposit in these accounts is likely to depreciate in value. It’s no secret that the value of money has been decreasing over the years. Think of the things you could buy with 50 dollars in the year 2000 and compare it to today’s market price. The meager interest rates offered by savings accounts often can’t keep up with inflation, gradually eroding our money’s purchasing power.
How Much Should You Invest?
The amount you should save versus invest depends on your individual circumstances. However, a good starting point is to aim to save at least 20% of your income. While saving more is always better, allocating 20% of your income allows you to accumulate a substantial amount of capital over the course of your career.
Initially, prioritize building an emergency fund equivalent to approximately three to six months’ worth of typical expenses. This money will be your safety net, allowing you to fly higher. Maybe you want to change your career or start your own business. This emergency fund will allow you time to look for the perfect opportunity. You may even look for low interest rate personal loans to start your own company. Money is nothing but a man-made concept. So, wise people learn to manipulate money to dominate the market. Taking loans when needed is part of the game.
Determine Your Style:
You want to play football. But there’s not one style to it. You can play a defensive game or be aggressive to score a goal. It’s up to you to decide your game plan. But, without a game plan, you are always on the losing team. When it comes to investing, it’s essential to determine your preferred investing style.
- If you have confidence in your investing knowledge and skills, you may want to manage your investments independently. This hands-on approach requires active management and decision-making on your part.
- If you’re new to investing or prefer professional guidance, you can work with an experienced broker or financial advisor. They can assist you in making investment decisions, regularly monitor your portfolio, and make adjustments as needed.
- After gathering information about your financial goals, risk tolerance, and preferences, robo-advisors automatically use algorithms to manage your investments. Think of it as the AI of investment. Would you be comfortable with an AI managing your hard-earned cash?
Diversify Your Investments:
Are you stupid enough to put all the eggs in one basket? Of course not! They say investments are subject to market risk. By spreading your investments across a range of assets, you reduce the impact of poor performance in any single investment on your overall portfolio.