How to
invest now?
As an entrepreneur, I am always looking
for ways to invest. There are so many places to look into such as stocks,
mutual funds and bonds, and even more complicated types of securities and
investing strategies like gold and real estate.
As much as I love real estate, this alternative investment at the start
of my investing career is too high-risk for me, and its high-reward securities
are much more speculative than plain old stocks and bonds. I will not deny the
opportunities for big profits, but they require some specialized knowledge.
Experts and professionals generally agree
that new investors should focus on building a financial foundation before
gambling. And the first place to look is our savings account, and I don’t even have
enough money to invest in real estate. Fortunately, I found a business article
that guides new investors with some extra cash as low as $1,000. First, they
recommend that we have three to six months of our salary saved up for
unexpected hardship because a safety net is very important. And after we’ve
covered ourselves with a rainy day fund, we can invest that money, put it to
work, and make it grow.
The article provides five simple ways to
get started:
1-
We
should start contributing to our 401(k) and make good use of it because it is a
big reward for saving, considering it is something we should be doing anyway.
For the typical investor, putting cash in a diversified mutual fund offered via
the 401(k) and allowing it to grow steadily over many years is a powerful way
to save and plan for retirement.
2-
For
people like me who are a bit more impatient and don’t want to wait until my 60s
to access investment profits, the article suggests I consider opening up a
taxable investing account and buying an index fund with my $1,000. An index fund is “a pool of
investments aligned to a major stock market benchmark like the S&P 500 or
the Nasdaq-100. And as such, these funds are extremely transparent because the
list of stocks in the portfolio is fixed, and because of their immense
popularity their providers can charge extremely low management fees and still
turn a profit.”
3-
The
undeniable truth is that the rate you get from a typical checking account at
major banks is at just 0.03%, adding up to just 30 cents a year on $1,000.
There is a trade-off with risk and reward and for people who don’t like the
notion of stock market volatility, an insured savings account is almost as good
as cash, but is clearly not going to make you a millionaire.
4-
A
common problem is credit card bills. Paying down your debt and putting $1,000
toward those obligations is a smart idea because the more principal you can pay
off up front, the less interest you’re paying on the remaining balance each
month.
5-
Last
but not least, invest in yourself. It is important to note that your time is
worth something, but $1,000 can go a long way for people willing to seize a new
opportunity. Building your own business could be the most profitable investment
of all.
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