Learning how to invest your money can make a big difference in your financial future. Usually, your first investments are the most difficult to understand.
This article will go through the basics you need to know to be successful!
Open an Emergency Savings Account
Have you ever heard of an ‘emergency fund’?
Before you invest in other avenues, make your first investments in yourself.
Why need it?
Here’s why;
- You can use your emergency savings fund for urgent matters that often come abruptly.
- As the money accumulates, you can invest elsewhere, i.e., CDS, stocks, and real estate investing, or do like the richest people on the planet.
When setting up your first emergency savings account, you should consider easy money access, transfer, and affordable rates right for you.
What Should I Invest $1,000 In?
The answer depends on your: financial goals, level of risk, willingness to learn, and how fast you want to grow.
Take a look at some basic first investments below;
1. Stocks market – Here, you buy a piece of the company (i.e., Apple and Walmart) and reap a reward on value increase. As a beginner, don’t go for Individual stocks: riskier than index funds. Check out my tips here!
2. Bond – It is a form of debt. They are a very safe investment with a low return on investment. You will only lose your money if the underlying entity that is borrowing your money defaults.
3. Mutual Funds – They grant access to more diverse assets; however, fund managers manage them. Thus, high account maintenance costs and hidden fees.
4. Exchange-Traded Funds (ETFs) – Similar to mutual funds, but not actively managed. Therefore, no high maintenance costs are paid.
5. Real Estate Investments – For first investments, go for a REIT or real estate investment trust. You can enjoy dividend-based income from owning a piece of real estate.
6. Employer-Sponsored Retirement Plan – The option to create a retirement account is essential. Most employer-sponsored retirement plans grant you to invest either in Roth IRA or 401k.
Choosing what company to invest in for high returns is a talent. I would recommend you for a Stocks market account.
Here’s how to get started with only $5!
a. Fund the account
b. Search for the stock you want
c. Purchase it!
Robo advisor (Robo investor) online brokers are the best stocks against others like TD Ameritrade, Robinhood, and Fidelity Investments. They have a financial advisor/software that makes purchasing decisions for you.
You can double your money!
Using the rule of 72 tools, the duration taken to double your investment is determined accurately – compound interest power. Faster growth to attain financial freedom is prior to financial planning.
Some tips for quick growth include;
Ø Investment management with various vendors.
Ø Obtaining more money for investment.
Ø Creating a working financial habit.
Yes! With notable fluctuations in the stock market, you can lose most of your money. Many evade risks by diversifying their investment portfolio.
Remember never to invest in what you don’t fully understand.
Consider the basic first investments if you desire to control your personal finances. There are many available resources to help you grow. Pick the strategy that suits your bill and financial well-being, now and tomorrow.
