Some people are afraid of investing. Even if it has the ability to grow your personal wealth, there are risks involved and that is what scares some people. Although the economy seems to be holding up and steadily improving, people are still hesitant to part with their money – choosing to prioritize saving over spending.
But if you think about it, even with all the risks, investing will do you more good than harm – but only if you do it correctly. One of the things that you must do while paying off your debts is to increase your income so you are assured of a steady stream of debt payment fund. To secure that, you need to look for a supplemental source of income that will not get in the way of your current day job and will not remove too much time away from your family.
Beginners guide to investing for personal growth
Investing is simply putting your money where you know it will grow. This can really help you increase your debt payment fund. When you invest, it can come in any form – as long as whatever you use the money on will grow in value over time. For instance, buying a car is not really considered an investment because it decreases in value as soon as you drive off from the car dealer. Buying a home, on the other hand, will increase in value – more so when the surrounding area is being developed or modernized.
There are also investments that you can hold on to and earn from for a very long time and there are those that you only own for a short period then you sell it for profit.
Here are different types of investments that you can use to grow your personal wealth.
Stock. When you buy a stock, you get to own a part of the company that it represents. When you buy a stock for $5 per share and it increases to $10 the week after, you just doubled your investment. The value of stocks rise and fall and the technique is to know when to buy and sell your stocks for profit.
Mutual fund. This refers to a group of stocks that is managed for you by a money manager. you can buy shares in the mutual fund and the professional money manager will trade the stocks to grow the value of the whole fund. Usually, a mutual fund is traded in a specific sector only – for instance, the retail or energy sector.
Bond. A bond is the safest way that you can invest but it is not always the best in terms of payout. It is something that you buy for a set price and after a pre-defined term, you can redeem it along with the gain that comes with it’s maturity. There are types of bonds that earn interest periodically while there are those that only payout when it matures.
Most investments comes with a risk factor of losing value instead of gaining. It is no longer wise to assume otherwise so you need to exert extreme caution when choosing your investments. Bonds are the least risky while stocks are on the opposite of the scale because the market is very unpredictable. But know that the greater the risk, the more potential for wealth building.
Make sure you read thoroughly about what you are doing so you can manage your investments wisely. Visit authority sites like MarketWatch.com or Money.com for investing news. You can also look for investment tools that will help you stay on top of your finances like those from CNN Money.
When to save and when to invest for personal growth
It is very important that your investment be treated differently from your savings because the latter will not grow as much money as it should. Your reserve fund should remain intact because that is what you will use in times of emergency. By keeping it separate, you are also protecting your investment from being withdrawn before it can reach its maximum returns. Regardless of how their personal finances go or what their expenses will demand, they don’t have to sacrifice the momentum of their personal wealth because they have adequate savings for that.
This means you may have to grow your savings to 4-6 months worth before you can fully engage in investing. But that does not mean you have to postpone investing. Some people invest a little and whatever they get earn from it will be invested in something else. That is how they keep the ball rolling and the monetary growth more significant.
Here are some tips that you can use to keep your investment and savings intact.
Create a budget plan to determine how you will pay off your bills and at the same time, put aside money for your savings and investment.
When investing with limited money, put in only what you can afford to lose.
Do not put everything in one basket. Buy stocks from different companies or invest in both mutual funds and bonds.
Take advantage of investments that you can make for your future like your 401(k) plan. This is beneficial because employers usually put in as much amount on this plan as you are giving every month.
Always use your logical sense when investing and do not use your emotions. Lower your stress by not watching the market news everyday. A bad interpretation of the news can lead to your selling of valuable stocks that could eliminate the potential to earn more.
Diana hates debt just as much as you do. She is a finance writer for National Debt Relief. She aims to provide the best information to win the battle against debt.