If you are my age, then you have grown up with the belief that in order to get a head in life you have to work like a mule. In this day and age more and more people are learning that you don’t have to work your life away to live the life that you want to live.
Infect you can leave a good life by working less and having more time to do the things you love and spend with your family. One of the tools that helps you do this is investments.
Let’s face it rich people don’t become rich by just saving all their extra money. Many get rich due to investing. The rich don’t just invest to get rich they invest to stay rich as well.
If you don’t know anything about investing, then you probably think you need to have thousands of dollars to start to invest. Let me be the first to tell you that is not true.
We live in a digital world were any and everything you want in life is just a click away and this also goes for the investment world. You can start an investment with as little as $5 a month through apps like Acorn and Stash.
But why is investing so important when it comes to bettering your future?
Definition
Expend money with the expectation of achieving a profit or material result by putting it into financial plans, shares, or property, or by using it to develop a commercial venture.
In other words, investing is a way to have your money make money. You place an amount of money in a type of investment that will give you a return on the money that you have invested in it.
Investments are a way for you to make extra money without working for it. Though you do have to do your research (make sure it is a good investment and not a scam). This is a great way for the ‘Have nots to become Haves’.
Types of Investment
There are three types of investments
Ownership
Stocks
Real Estate
Precious objects
Business
Crypto
Lending Investments
Bonds
CD’s
Savings accounts
TIPS
Cash
Savings
Money Market
Cash
Terms of investments
There are two terms of investment, short term investments and long-term investments.
Short term investing is like day trading. Day Trading is when you buy into stocks for a short period of time (like a few days, weeks, or months) then sell them.
Long term investing is like buying a home or stocks within a company to hold for a long period of time.
Reasons for investing
A few reasons people have investments are as followed:
Retirement
Kids college fund
Income (some people are full time investors and invest for a living)
Residual income (some people invest into Real Estate to have rental property this way they have another source of income along with their day-to-day jobs)
Early retirement (some people invest to be able to retire before the age of 65 more and more people these days are retiring in there 20’s and 30’s from regular 9 to 5’s )
Financial freedom
One of the benefits to having a good investment is the ability to use your investment to aid you in financial freedom.
Now days young people are using investments to help them become financial free and living more simple lifestyles by living off less income and using their investments to live there day to day life. Real Estate investments like (House hacks) help them to achieve this lifestyle.
This is very popular with most minimalist.
The smart way to invest
The smart way to invest is to budget a amount of money that you will use to invest from your monthly income. You can start at any time and with what ever amount you want (depending on the investment).
If you are looking to invest in real estate you will need to have a pretty good savings to start investing however there are many government programs you can use without having to put a lot of money down (I will talk about this in another post).
The first step to any investment is to do your home work. Find what you want to invest in and read or watch video’s as much as you can about the investment. Remember that all investments have a risk to them. Some have a bigger risk then others (yet it’s still a risk).
Also never invest money that you can not afford to loose (this is why you should budget the amount you want to invest) and you want to use money that you wont miss. You also should have a investment plan.
Having a plan is very important you need to have a plan for entering the investment and when to exit the investment (specially if you are doing short term investing). You need to know what you plan on getting out of the investment and what to do if you are not getting what you should be from your investment.
Well, that’s all I have for today, I hope this helps you on your journey.
Thank you for reading Everything Frugal.
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