While saving accomplishes both, smart investing makes the idea of wealth creation, and therefore financial freedom, more accessible. Never depend on one source of income. Invest to create another source.
Anxiety about investing is not uncommon: it is about financial loss instead of financial gain.
Losing your hard earned money is not easy to process and would eventually lead to the person depositing their money into an FDIC insured bank account. Here’s the catch, though – the low interest rates offered by savings accounts can’t keep up with ever-increasing inflation.
This means that the purchasing power of money decreases the longer one saves, guaranteeing that it loses value.
On the other hand, making informed decisions and betting your investments in the right places – can reduce the risk factor, increase the reward factor and create significant long-term results.
Savings are an essential part of the financial toolbox, providing the capital necessary to invest: at a minimum, investing allows one to keep pace with the rise in the cost of living created by inflation; at most, a long-term investment opens up the possibility of interest compounding.
Given that each investor enters the market decisively due to unique circumstances, you don’t need to be a market expert to start investing.
Furthermore, the investor needs to identify his personal investment goals. – An investor who is looking to generate additional income through investing or accumulate enough wealth for retirement will make much different investment choices than an investor who is just trying to earn a little interest to offset inflation and protect his/her purchasing power.
1) START SMALL, SET AN AFFORDABLE BUDGET:
Understanding one’s cost of capital and being realistic about an investor’s expenses determines how much he/she puts into his/her investment strategy: how much can one regularly deposit into their account; when you open your account and the securities you invest in.
Despite other large financial commitments, the investor should never underestimate the power of starting small and working towards setting an appropriate budget.
On a side note, while it makes sense to pay off high interest debt before investing large sums of money, that doesn’t mean the investor can’t start investing at all.
2) IDENTIFY THE TYPE OF INVESTOR YOU ARE:
The longer the time frame, the more risk the investor can take overtime, but if the investor is more specific and forgets the type of person, then he may be more likely to invest in funds that provide exposure to multiple holdings instead of buying individual stocks. stocks, bonds or other assets.
3) OPEN AN ACCOUNT, START INVESTING:
As a novice investor, one can start with as little or as much money as one would trust to put aside, even small amounts, invested at a steady pace that works for the investor, can lead to significant portfolio balance over time – the investor should not worry too much about your initial deposit, but remember and try to add money to your account regularly.
4) CONSTANTLY MONITOR INVESTMENTS:
Like anything that needs regular maintenance, the investor should always review their investment portfolio regularly – setting a constant reminder to review one’s investments.
Ultimately, investing is a skill, part art and part science—a practice that every investor engages in and uses in their quest to become financially empowered.
Regardless of whether the investor becomes a market maven or some other average investor, with time and a specific investment plan, the investor will have the freedom to follow their dreams and achieve financial independence.
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