We all know the importance of saving money. But, the secret of true financial success is not limited to working hard and simply saving, it’s much beyond that. You have to take the next fruitful steps leading towards your financial freedom. And, “Investing your money wisely” is the real step towards your personal as well as professional growth.
I know being a first-timer, it’s not that easy to figure out the smart investment choices. So, whether you are a newbie investor or have some sort of experience, you will love to make money work for you. For that, you need to learn how to start investing in the right direction.
There’s nothing to worry about when you have a whole lot of investment options around. What matters is following the correct strategy and picking up the right investments as per your priorities and situation.
Now, let’s catch up with the basics, and a few important rules to simplify your investing path.
Investing Basics: 5 Golden Rules to Start
These useful tips can surely help you decode the complex investing process anywhere.
1. Your Financial Goals
First and foremost, be specific on your financial goals, both short term, and long term. Once you are clear on it, you can stay focused and work in the direction of achieving them. You wish to own a house, buy a new car, or plan an exciting vacation with your family. Shortlist your targets to make wise moves for attaining them gradually.
You may come across a number of financial intermediaries to help you in achieving your financial dreams. But, be very cautious and choose the one that fits your requirements.
2. Investing: Risk vs. Returns
Are you a high-risk, moderate-risk or no-risk taker? The answer itself shall guide you towards the best fit. Therefore, firstly decide your preferences and then only move ahead.
What kind of returns are you expecting? Of course, no one can guarantee fixed returns. But, if you are a risk-averse investor, there are many safer options for you to look around.
3. Focus on Retirement Planning
You have just started working, and there is a long time to retirement. So, why to think of it now? But, the truth is you have to plan now so that you can retire financially healthy. Don’t procrastinate for your ultimate goals. The earlier you initiate investing, the more you can accumulate for your post-retirement years when you get older.
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4. Emergency Funds in Place
Do you have sufficient emergency funds in-store? A government-issued or employer-provided coverage may not cover all the medical costs if any arise. Therefore, keeping aside some money for rainy days, or any unforeseen circumstances seems to be a great idea.
5. Build a Well-Diversified Portfolio
You might have listened so many times. “Don’t put all eggs in one basket.” Diversification is the key to minimize risk and explore better investment opportunities. However, too much diversification can make it a bit difficult to keep track of your investments. So, you can look for an optimum one!
Investing Money: The Bottom Line
The world of finance offers us a wide pool of investments to choose from. Regardless of what you select, be cautious with your hard-earned money. I know, it takes a lot of sweat to grab those extra precious dollars. So, they must be put in safely where they can reap you adequate and timely returns.
I can’t conclude without adding a very famous quotation from the investing genius, the world’s greatest investor:
“Someone is sitting in the shade today because someone planted a tree a long time ago.”– Warren Buffett
These investing basics shall definitely guide you in making the right moves. Way back, I created this Investing Basics Infographic that shall further simplify in your financial journey.
Now, if you start investing early, it can help you live your dreams to the fullest. But, do keep your emotions in check and think to meet your long-term objectives systematically. Moreover, investing knowledge can’t be gained overnight, it takes time to gather its true insights.
So, have you planned your investments? If yes, great! If not, don’t wait and initiate now. What are your thoughts on investing money early? Feel free to share your opinions on the same.