WHY YOU NEED TO BE INVESTING, ESPECIALLY IF YOU’RE BROKE
Otherwise, you are literally lighting your money on fire.
So, you want to be the next Warren Buffet? Who’s Warren Buffet, you ask? If that is your next question you have come to the right place. This is the beginner’s step-by-step guide to investing. If you think you might be ready for the next step (i.e. you have heard of Warren before), read our intermediate guide to investing.
“Investing” your money does not mean picking stocks. It has nothing to do with Wall Street. And it definitely is not as hard or as scary as you might think.
What is scary is if you are NOT investing your savings. There is this thing called inflation that erodes the value of your dollar over time. Therefore, every dollar you have on hand should be “invested.” Before you panic, we will discuss what investments will be AT RISK and which accounts are GUARANTEED.
Money market accounts like high-yield savings accounts or certificates of deposits are where you should keep your emergency fund (e.g. immediate access), index funds for your house/car/vacation fund (e.g. need for the next year or two), and target funds for your retirement fund (long-term access).
We will walk through each of these categories and what they mean in detail.
Why is investing important?
Investing your money is the key to growing your wealth and securing your financial future. Investing helps you increase your capital, expand your financial options, and build your net worth over time. When you invest your money, you’re leveraging the power of compound interest, which can help your money grow exponentially. This means that with each new dollar you invest, your total account value increases. Investing also helps protect your money from the effects of inflation. As the prices of goods and services increase, the purchasing power of your money decreases. Investing helps to counteract this effect and can help you stay ahead of inflation.
What are some things you can invest in?
Investment options are vast, and investors have many vehicles to choose from. Investors can choose to invest in stocks, mutual funds, bonds, real estate, exchange-traded funds (ETFs), and more. That said, it’s important to note that not all investments are created equal. Different investments come with different levels of risk and expected returns, and you should do your research before investing in any asset. When choosing an asset to invest in, it’s important to consider your risk tolerance and desired outcome. If you’re looking for a quick return on your investment, stocks, and ETFs are good options. However, if you’re looking for a low-risk, long-term investment, mutual funds, and bonds may be a better option. Why should you invest even if you’re broke? Investing is not only for the wealthy. Even if you don’t have much money to put aside, you can still reap the benefits of investing. The key is to start small and build your portfolio as your income and savings increase. Investing is not a “get rich quick” scheme. It’s a long-term game that requires patience and discipline. But, if you’re smart about it, you can grow your investments over time – even if you start with a modest starting balance. And, investing is the only way to earn returns that keep up with inflation and guarantee a comfortable retirement.
How can you start investing?
The first step to investing is to set aside money that you can actually invest. While it’s possible to invest with as little as $100, it’s important to make sure that you have enough money saved to cover your other financial obligations, such as rent, bills, and debt payments. Ideally, you should try to set aside at least 10-15% of your income. This way, you can start investing with a solid foundation and grow your wealth over time.
Investing is a process
Investing isn’t a one-time event. It’s an ongoing process that requires regular maintenance and review. You should periodically review your investment portfolio and make sure that it’s in line with your goals and risk tolerance. You should also take advantage of tax-advantaged accounts, such as 401Ks and IRAs, as they can help you maximize your returns.
Conclusion
Investing is the key to long-term wealth and financial security. At its core, investing is about using your money to make more money. Even if you’re broke, you can still reap the benefits of investing. All it takes is a small amount of money, a good investment plan, and the discipline to stick with it. Get started today and take the first step towards building lasting wealth and financial security.