Investment is necessary to anyone’s long term financial health. It takes the process of earning and spending, earning and spending, and brings a new dimension to it. By feeding into a broad portfolio of well chosen investments, your money will grow a lot faster than you could work to earn it. But it takes careful planning and a lot of understanding to get it right. It can be hard to figure out just how to begin, especially if you don’t know a lot about investing or don’t have a bunch of resources to do it.
In general, it’s important to invest in several unrelated capacities. This is the essence of diversification: if one area or market fails, you’ll have other investments growing to compensate for the loss in that isolated area. Hopefully, all of your investments will be somewhat or wildly successful. It’s also important to invest for different time periods. Think of it like spacing out harvests in a large farm. You don’t want all of your crops to be harvested at once. Instead, it’s better to have them coming to fruition a little bit at a time, so you always have something to live off of, if a living is what you are trying to accomplish with your investment. Some people are simply concerned with retirement. We’ll break it all down below.
- Forex Trading: Big Short Term Dividends and Fast Learning. Forex is an easy way for new investors to learn about the complexities of global finance, in small bitesize pieces. Users go to online brokers like CMC Markets and make an account. This allows them to see dozens of combinations of currency pairs, which are always being traded against one another all around the world. The investor is then asked to predict how their relative values will change over a short period of time, with dividends and losses worked out accordingly. Pros: Big Gains, Fast Paced, Learn Through Trial and Error, Free Demo Account With No Financial Risk. Cons: High Risk, Easy to Lose Money with Inexperience.
- Real Estate: By buying your own home, your property is likely to appreciate, allowing you to sell it for more than you bought it. You’ll also keep all the money you pay into your house, in what is known as equity. This is one of the primary wealth building tools used by people getting richer all around the world, and with interest rates still very low, it’s something you should definitely take advantage of. Pros: Savvy, Powerful, Practical. Cons: Expensive and Challenging to Do the First Time.
- Index Mutual Funds: Index Mutual Funds, often packaged as ETFs are meant for the long term investor. They grow with the national or global economies, because the investor uses them to buy little pieces of the world’s best companies. It’s one of the most conservative investments that can be made that still yields high returns. Pros: High Returns, Trusted Method, Cheap. Cons: Takes a Very Long Time (Decades) to Mature.
You might also remember a previous Fabulously Broke’s post about Dividends. Take a look a it as well to learn more about this other type of investment. They are also meant for long-term investors but tend to bring higher returns than many ETFs.
If you are a young investor, start these methods this week. In a few weeks, you’ll start to see the benefits and in years or decades, one or all of these could change your life.
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