Have you heard of the phrase – ‘make your money work for you’ ? If you haven’t then now you have…
Making your money work for you means investments so that it grows over time potentially increasing the amount of money you have, through buying financial products (investments), and sell them at a higher price to produce a profit. Many people do not realise that, the only way to make money without having to work all the hours in the day is by putting the money they have into doing work for them. It does take time but with regular savings, put aside to build wealth one can gradually achieve financial freedom to some level In this post – How to start investing for dummies, we’ll talk a short look at some key pointers.
I would say, a key habit that every parent should teach their child is – money management and how to invest or save to grow wealth during their lives. Unfortunately, not many children get this education which is why there are so many people who end of in financial trouble.
There are many more who live on or below the poverty level even though they had or have education and a chance of earning good income in comparison to many in third world countries. What they fail to do is grow their money by looking at how they can build wealth.
Let’s start with some examples, you can look at growth investments, shares, properties, cash, etc. Investment can be complicated. However in the following lessons I’ll break down simpler ways to understand it.
Basic Investment Steps
To start with any investments I would recommend you do the following, but be mindful that this is just my suggestion for information purposes. Do not take this post as financial advice. If you really want to invest then make sure you seek help and advice before putting your money into the market.
Always remember that the value of investments can go up as well as down so you may end up losing money. Still keen on growing your money then consider putting some money aside from your earnings for ‘Emergency fund’ before putting any money into the market. A good rule of thumb is 2 to 3 months of saving equal to your monthly income. Just in case anything goes wrong.
Okay so let’s assume you now have your emergency fund saved. Next thing is looking at what investment you can make.
Are you ready? Before you can start any investments you’ll need to get your finances in order. Meaning pay off your debts, live below your means (spend less than you earn) and track your spending. Develop a good money management habit, otherwise you can end up in trouble, due to mismanagement of your finance.
If you aren’t ready set up a debt payment plan, which will be aggressive in pushing you to pay off the debts. Set yourself a goal as to when you’d be ready to invest. In the meantime learn all the tricks required to be successful at finance. Take time to learn and understand the risks that follow along.
“To win big, you sometimes need to take risks.”-Bill Gates
Books that you can read to learn more about money
First of the book’s I would recommend you read is:
The greatest investment advisor of the twentieth century, Benjamin Graham taught and inspired people worldwide. Graham’s philosophy of “value investments”—which shields investors from substantial error and teaches them to develop long-term investment strategies. If you are serious about investing then you should consider getting this book.
Over the years, market developments have proven the wisdom of Graham’s strategies. Commentary by noted financial journalist Jason Zweig, whose perspective incorporates the realities of today’s market, draws parallels between Graham’s examples and today’s financial headlines, and gives readers a more thorough understanding of how to apply Graham’s principles.
How to determine your investing habit?
Determine your path. Figure out how much you’re willing to invest initially. There is no rule as to how much you need to invest, thus don’t go all in, and use your emergency funding. Start around £100 and set clear goals – try to automate how you invest each month and stick to the set amount.
Also figure out what aspect of investment you’d like to focus on. The easiest would probably be the stock market as that can be accessed anywhere. Once you’ve figured out one area you can always change it around.
Find an investment guide. The next step would be to seek assistance, whether it be from a financial planner, your bank, investment firm or simply and online investing app. Learn good money management skills.
- Financial planner; would help you if you weren’t sure. For example, if you were unaware of the various investment types, they’d explain them.
- Your bank; they could explain to you the impact of the money changes on your account, how to remove debt or offer advice on the biggest potential growth.
- Online investment firms; these include apps, websites or online courses that are way cheaper. They are effective too and are easier to navigate.
With that said, one financial investment platform I use and really enjoy using is eToro. If you are keen on investments then read this post – What Is Etoro And How To Invest To Make Money?
The platform provides a free demo account for anyone interested in buying stocks, shares, cryptocurrencies etc. to practice and once they feel comfortable to then move into a real account and invest money.
Go ahead and register with eToro here – Register with eToro
Remember the following:
“If you were born poor it’s not your mistake, but if you die poor it’s your mistake.”-Bill Gates.
So, read learn and apply the theory of investing, so that you can break out of financial limitations and enjoy life without having to always look at pennies.
