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by Sara D’cruz
Would you like to invest your money, but do not know where to start? We offer you a series of investment preparation necessities that will help you to analyze what is your best option.
Investing is not a luxury for most people, but a quality that feeds on patience, discipline and diligence. Well, you can increase your financial resources if you have clear goals, frequently fuel your investments, and choose the appropriate mechanisms for the best investment conduct.
The easiest way to start an investment is with the snowball effect; which proposes that you save small amounts of money to eventually make a larger investment, which will hopefully be an important economic boost for you.
What Is An Investment?
Investments are directly related to your savings, because you have to save so you can invest. Therefore, a stock investment is basically the purchasing of a share of a company in exchange for possibly or eventually earning a profit.
An investment can also be the purchase of various goods; considering its resale value, or its productive value (the potential profit you can generate).
The whole premise is that you should invest only extra money from your savings, and/or other small amounts of funds that do not affect your daily or monthly financial requirements. Of course, it is not advisable to risk more money than you are able or willing to lose.
HOW DO YOU GET READY TO START INVESTING?
Below are eleven basic things that you must do in preparation to give yourself the best chance for investment success, longevity, and peace of mind…
1. Analyze Your Available Resources
If you have enough money in your savings account to cover ALL your bills for six months or more, then you can start to invest in “safe” and affordable long term stocks. However, if you don’t have at least 6 months of savings, and you are anxious to start investing now, then you must evaluate how willing are you to possibly lose some or all of it, and maybe not be able to pay your bills.
Ideally, you should never do anything to threaten the stability of your nest-egg savings.
2. Consider Profitability And Risk
The return on investment (ROI) is directly linked to the level of risk involved in an investment. If you aim to get the highest rate of return possible by investing in higher profit stocks, then the risk level will also be higher than if you decide to start small with lower paying safer stocks.
The choice will depend on your risk tolerance level, and the time-frame of the goal(s) you want to achieve.
3. Define Your Goal(s)
It is much different investing money to pay for your college education, to buy a house, or to save and “invest” your money to take your dream vacation. As a result of one of those type of “investment” goals, you are not actually taking a risk, because there is no chance of you losing your money.
On the other hand, you are not risking money, but you are also not making money. In other words, you are spending money, and the only ROI (return on investment) is the enjoyment of your purchase. This type of spending should only happen after you have achieved your savings and investment goals
4. Investigate Fees For Money Services
Any investment involves the expense of various service fees. The banks, financial planners, or savings and loans all charge fees for their services, just like any other company. You should know upfront what investment service fees are involved, so you can properly preplan all of your investment decisions.
5. Select The System That Best Fits Your Financial Objectives
You should request and welcome advice about the different financial plans at your local investment bank, so that you are able to establish what plan(s) best fit your business goals and economic reality. Remember that your investments are best started from extra money; not from your savings, or a loan.
Also, remember that with some banking investments you will not have access to your money for a specific period of time, or you can pay a penalty for early withdrawal.
Usually a checking account is a good idea, especially if there is no minimum deposit, monthly maintenance fee, minimum daily balance, or any other related bank fees. Unfortunately, there will be some fees involved, but don’t be afraid to negotiate to get some fees reduced or removed.
6. The Savings Snowball Effect
Study your net income, in relation to your daily expenses, to analyze how much money you are able to set aside. Being consistent with your savings will cause a snowball of savings effect within a few months. Small portions of income that are consistently added together month after month eventually become a considerable amount, and that consistency is what creates your savings “snowball effect“.
At that point, all you have to do is continue saving with consistency, and the size of that snowball (your savings) will keep getting bigger and bigger. Of course, the higher your income, the higher the percentage of money you can save and invest each month.
7. Stand Firm With Your Final Decisions
When your investments give you the expected results, even in small amounts, it may generate the temptation to withdraw money from the investment vehicle in which it was placed in to achieve good profitability. However, you must stand firm with your investment decision(s), and avoid using your invested money for other purposes, at least for a considerable period of time, to not affect the financial growth you are experiencing at that time.
8. Be Patient And Realistic
The lack of immediate results frustrates first-time investors who want to see investment success in the short term. The investments require a long time to achieve any significant results, so you must have great patience and perseverance. Do not venture into the world of financial profitability, if you lack any of these traits.
9. Keep The Faith
If you are making savings deposits with a determined frequency, it will help you to achieve the consistency needed to accumulate money slowly but surely. In addition, it is essential to follow the direction of your initial goals, and to not forget the “big picture” (6 months or more of savings, and stock market investment).
Keeping the faith; instead of unnecessarily changing your goals; is the key to ensuring that your monetary resources continue to increase as fast as possible.
10. Avoid Debt At All Cost
Using money that you do not own (loans or credit cards) to start your stock investments will generate a negative outcome in the long run. The continued monthly increase in your savings account will then essentially become a debt, because you will likely need to use some of your savings to pay back your loan(s).
Any stock investment has an element of uncertainty, so you must give yourself the best chance for success by using your own extra money. In other words, make and save more money by working overtime, or a second job, instead of being lazy or impatient by borrowing money.
11. Diversify Your Resources
Distribute your funds among different types of investment products, and asset classes, so that you are not totally dependent on any one type of investment to earn you a worthwhile profit. In that way, if any specific investment does not yield the expected results; you will always have a plan B, or a plan C, etc.
I, Sara D’cruz, have a degree in Mass Communication from the Sheffield College, Sheffield, UK. I work for a dissertation writing service as an expert dissertation editor providing full time dissertation help to many college students. Visit us at Dissertation Planet: www.dissertationplanet.co.uk
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