Savings and investing are two different words and saving is definitely not the best way to grow your money, the best way to grow your money is investing. A correct investment decision will produce the annual return of your savings plan in very few days. You already have an investment when you have an EPF & ETF contribution and/or a life insurance policy, but these investments will not derive the income you can get from stock market & mutual fund investment. While it’s complicated to master the stock market and other related investments, making prudent investments is something everyone can master with little education.
Before start investing, you have to make sure that you have no high interest paying debts or commitments which drains your savings. Also make sure to have an emergency savings account for your sudden expenses, now you are all set to invest your money.
Remember, if you are not ready to lose your money, then investing is not for you, you may stop with savings and traditional methods, if you want high returns, you need to take little risks and get ready & be prepared to lose a little. Follow these simple steps to get started.
Decide how much you want to invest.
Unless you have a big chunk to invest, you should start with a comfortable amount to invest, it can be 10% or 50% of your monthly income, but make sure to have a slow and steady approach till you master the investment weapon. Patience is the key and don’t be too patient to invest too. Put the decided amount in a separate account till it reaches a reasonable sum to invest. Don’t make this as an excuse for not to invest. Start little by little and slowly.
Start with a Traditional method
Try and increase the amount you contribute to the EPF and your Life insurance investment account, this will teach you the discipline and you will have peace of mind too.
Don’t spend and save, Save and spend, invest the savings
The best way to practice above is automating your investments and savings, learn to live with the rest of the money and take calculated risks to mitigate the loss. Automating the regular contribution will ensure your investment accounts are progressively growing.
Keep it very simple
I recommend you to start with a minimum guaranteed return mutual funds to test the investment method, Mutual funds are less risky than individual stocks and you will get expert advice on how your fund grow, also it’s an easy way to understand how stock market works.
Understand the risks
Most of the investments are risk associated, you can find very few investment options comes without risk, you have to take great risks to gain great returns, sometimes it may result in great losses. Understand the cycle of an investment and investments can rise and fall over a period and in long term you will reap the rewards. Many people saw their investment portfolio loosing half of the value during tough economic conditions, those who held the portfolio saw their portfolio recovering and multiplying over the years. In general investing is long term activity, don’t panic and sell your investment less than the price you purchased and it’s never a smart strategy, but sometimes you have to do so and with experience you will know when.
Decide the purpose of your investment
You should have a goal and to have a goal you should have a purpose. The purpose can be buying a holiday house, your dream car or travel the world after your retirement. Set your goal based on your purpose and don’t forget to consider the inflation and market fluctuations.
Educate yourself. Keep learning
If there is a will then there is a way. if you want to see your investments growing fast, then you have to educate yourself, there are numerous books, blogs and websites offering great knowledge on investing and growing your investments. knowledge will make you a master investor. Learn about how to analyse and evaluate investment methods and other investment basics, don’t depend on someone else to make your investment decision, no one cares about your money like you do. Be aware of market trends and manipulators to save your investments.
Know the jargon. test the tools
Sometimes charges of the fund managers and the brokers are higher than the returns you make, so make sure you know the charges and fees. Test the companies and brokers before you make big decisions with them. Try a demo stock trading account, use data analysing tools.
Follow these simple steps to establish yourself and keep on learning about methods to strengthen your portfolio; you will see your money grow with time.
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