Put money into your savings fund each month
This is the one rule that everyone should abide to. The amount doesn’t have to be a lot. In fact, it has to be a figure you can commit to each month – in which case, at least 10% of your income. The key here is consistency and to make sure you do not compromise on the figures.
Of course in the beginning, you would think your efforts are futile as it does not look like you are saving much. Well, 12 months down the road, a quick check would show you have accumulated a considerable figure.
Having saved a little is better than saving none. Plus you can use the money saved to build or diversify your investment portfolio.
As your income grows, try to save more than the 10% rule. The compounding effect can work wonders in giving you better returns in the long run.
Set clear and realistic goals
Before you venture into any type of investments, you have to set clear goals. Be realistic in what you would like to achieve within a certain period of time, be in within a few months or 5 to 10 years.
At any given point, do not let the investment consultants convince you to meet their expectations. Take note that the scrupulous ones may promise you the stars and the moon, just to make the investment option seem all the more appealing. Instead of taking their every word and going along with it, what you should do is to see what they have to offer and compare how that matches to your own expectations.
Are they able to meet, exceed or fall short on your expectations?
Having clear and realistic goals will also enable you to remain focused – regardless whether you are looking at setting up your first investment plan, thinking of diversifying your current investments or determining there is a need to make any changes to your investment options.
The thing about investments is due to its volatile nature, sometimes you will not be able to meet your goals. When that happens, you should not take it in a negative light. Weigh on the pros and cons, seek more advice, do extra homework and make a smart decision. Bear in mind that a good deal with a proven track record of providing short term gains may be more favorable as compared to a newly introduced good deal with a long term gain.
Look at your available options and select the ones you think would work best to your advantage.
Finding the right investment options
There is no direct way of finding the best investment options, however the easiest would be to find an investment consultant. Some would say, if the investment consultant looks sharp, drives a fancy car and wears an expensive watch, then perhaps it is worth your time to listen to what he or she has to say.
The reality is this may not necessarily be true.
Unless you know the person personally or he or she has a credible profile, you should not take the person’s word.
Another way is to look up on successful investors and learn what they did or are currently doing with their investments. Some of these investors conduct talks, seminars and even published books on their success, so the resources are not that hard to come by.
Just be wary of their words if it sounds too good to be true. Know that not everyone can strike lucky at their first investment. Always trust your gut instincts.
Do ample research and invest smartly
The next step is to make ample independent research on the various investment options currently available in the market.
Get sound advice from experienced and reliable investors and whenever possible, ask from those who have you at their best interest.
Most importantly, never ever let your emotions get the best of you. Many people out there are willing to trade an arm and a leg to get you to join their investment options, and the last thing you should do is to place your trust in the wrong people and end up losing most, if not all, of your savings. Always question their knowledge and advice and only invest when you are fully confident in it.
Look for good return of investments
Now that you have set realistic goals and done your research, how can you determine that the investment will have a good return?
The easiest way is to see the annual returns as that will determine your compounding amount as well as the amount you will have by the end of your investment period.
If you are considering to include real estate as one of your investment options, only invest in a property that has a steady growth in its market prices. Find out the growth prediction within a 5 to 10 years period and how much you stand to gain by the time you choose to sell off your property.
The reality is, the last thing you want to have is to invest in a property that has a stagnant growth, or worse off, reduces its value over time, giving you a loss instead of a gain.
Diversify your investment
Instead of putting all of your eggs in one basket and risk losing it all, it is highly recommended to have a few other baskets up your sleeves.
At this age, there are numerous investment options available in the market. Besides a savings account, you can choose to invest your money in gold, equity, bonds or real estate, just to name a few.
Diversification here means investing in different investment options, preferably those that provide a substantial return of investments. Some options may be riskier, while some others can be more conservative. Weigh out the pros and cons and opt for those you are most comfortable with.
Real estate for example is by far one of the most common and preferred investment option. Depending on the location, the property value and other contributing factors, this form of investment can promise high returns.