Let me start by asking you a very important question that is connected with your life.
Do You Want to Become Rich and Wealthy?
If your answer is “Yes” then read on as this article is dedicated on showing you the path to richness, wealth and happiness.
Well, the path to richness, wealth, and happiness invariably opens onto you when you start investing your money.
It would not be an exaggeration to state that richness springs out from investing money and moreover investing rightly. In this context, who can forget Warren Buffett who has made millions by merely investing money?
However, the fact of the matter is that there is a large chunk of people who are shredded with doubts and apprehensions about investing money.
They simply do not know how to start the journey of investing money so as to amass wealth. They bear a false notion that investing money is not their piece of cake. They are seen confused and bewildered over the important issue of “How to start investing money”.
So I thought it appropriate to come with an article that shows you how to start investing money. When your doubts are cleared, you can confidently begin your journey of investing money. At this point, I want to emphasize the fact that investing money is the golden route to wealth and happiness. By investing money, you give yourself an opportunity to turn your little money into a good amount of wealth over time. As a beginner, you just need a little bit of introduction and guidelines so that you too can amass wealth and richness by investing money.
So the need of the hour is to get yourself acquainted with the rules of investing money so that you can reap profits from your efforts.
Let’s see how you can start investing money:
Set up Your Investment Plan – Determine Your Investment Goal
First things first. Before you set out to invest money, you have to make sure that you have your Investment Plan in place, ready to be implemented. So, it is important for you to determine your investment goal.
You have to come out with a clear cut understanding of what drives you to invest your money.
You have to determine your financial goals for investment.
Everyone has their goal of investment.
So establish your Investment Goal.
It is the foremost thing you need to do if you really want to gain from your efforts of investing money.
Is it for retirement that you want to invest your money? Is it for your children higher education? Are you planning to buy a home? Are you investing for amassing wealth so that you can enjoy your life to its fullest? Or a Mix of these Goals or Something Else. When you set your Investment Goal, you come to know exactly how much money do you need to fulfill your investment goal(s).
Establish Your Investing Timeline
Once you get your Investment Goal in, it’s time to set your Investing Timeline. Actually, merely establishing your investment goals serves no purpose when they are not accomplished by a definite timeline. With an Investment Timeline, you actually set a deadline by which you want to achieve your financial and investment goals that you have already set for yourself. For example, when you are investing for retirement, and you are aged 30 years, you may establish the timeline as 25 years which means that when you turn 55, your investment yields the desired and pre-established retirement benefits so that you live your retired life as planned by you.
Determine Your Comfort Zone – Establish Your Risk Taking Ability
It is rather complicated subject, but, before actually finalizing your investment portfolio; you have to determine your “comfort zone” that is you have to establish your risk taking ability.
The necessity for finding your comfort zone springs from the fact that each investment option has its own level of risk attached with it.
So if you are choosing to invest in stocks it means that you have adequately researched and accessed the risks attached with it. As a matter of fact, stocks hold the maximum risk of investment as returns are solely subjected on the prevailing market conditions.
Otherwise if you are not keen to shoulder risk on your investment portfolio, you can always go for safer options such as investment in mutual funds, bonds or certificate of deposits.
On the whole, whichever investment portfolio you choose, it should be in perfect harmony with your investment goals, risk bearing capacity, and should also take into account the time horizon subject to which you have chosen to make investments.
Here it is necessary to state that your Comfort Zone is subjected to various factors (as already stated above) and should be decided after due consideration to all of these factors. Here, your analytical approach should take the lead rather than your desires or beliefs.
Determine the Amount You Can Invest
Once you have finalized your Comfort Zone, it’s time to determine the amount you can invest. Here, I want to reiterate that it’s important to decide the amount you would be investing because it is the base on which your future wealth would be determined.
However, as a general rule you can start investing anywhere from 5% to 10% of your monthly income. An investment of $100 per month would be just perfect to start with. Having said this, the amount of investment can even exceed the above quoted figure.
This depends on the amount that is actually left with you after meeting your monthly expenses which includes food, utility payments, debt repayments, rent, insurance premiums, children school or college fees, and other sorts of expenses that you take care of. Before investing, it is important that, you adequately make arrangements for the Emergency Fund which is generally about six times your monthly income so as to survive any sort of an emergency situation that may crop up in the future. It is never too late to start investing, and no amount is small to be disregarded as investment. It is just important to start your journey in the world of investment.
Determine Your Mix – Look At the Investment Options
Finally, after doing all the above exercise you arrive at the point where you decide your actual investment portfolio or your product mix.
At this stage, you have to look, research for the investment options.
Obviously your investment options are in line with your investment goals, investment timeline, and are tune with your comfort zone and risk taking ability.
When you determine your Product Mix, you construct your investment portfolio which can be composed of a mix of stocks, bonds, mutual funds, CDs, bank deposits, investment in commodities, gold, silver, in real estate, ETFs, etc.
As I have already mentioned above, your investment portfolio should be based on your ability to shoulder risk.
So if you want moderate returns and do not wish to plunge into market uncertainties you can always prefer choosing bonds, debt instruments, gold or investment in real estates.
Here, one point falls in tune and that is your investment should be done with a long term perspective which should generally be more than five years so as to increase the probability of high returns. With the increase in the investment period, you invariably tend to lower the risk of investment.probability of high returns. With the increase in the investment period, you invariably tend to lower the risk of investment.
Then you should also concentrate your efforts so as to build a diversified portfolio which also tends to minimize the risk of investment and builds on your return margins.
So if you take care of the above points, you can safely start your journey of investing your money. You would have clarity and belief that investing will help you build wealth and riches. The doubts will wither away and instead you will muster in the confidence of investing money. You will never ponder over, “How to start investing money” rather you will take the necessary steps leading to invest your money.
Wishing You Happy Investing!