Would you like to invest your money but do not know where to start? We offer you a series of considerations that will help you to analyze which is the best option.
Investing is not a luxury of people, but a quality that feeds on patience, discipline, and diligence. Well, you can increase your financial resources if you propose clear goals, make a frequency to fuel investment, and choose the appropriate mechanisms for its conduct. The easiest way to start an investment is the snowball effect, which proposes saving small amounts to make them an important economic boost. Discover how!
What is an investment?
Investment is directly related to saving. An investment can be the purchase of a good considering its resale value or its productive value (the money you can generate thanks to what was bought). We also talked about investment when we put a sum of money in an economic activity in order to get a return, or profitable return, the benefits derived from such activity. The premise of thumb is that you should invest only extra money or small amounts that do not affect your daily economy. Financially, it is not advisable to risk more than you are willing to lose.
How to start investing?
1. Analyze available resources
If you have enough money in your savings account cash to cover you for six months, then you can invest long-term and in larger-scale objectives. Instead, when you generate a lower savings it is necessary that you evaluate how willing are you to lose part of it. The goals will be less ambitious so as not to lose the stability of your savings.
2. Considers profitability and risk
The return or return is directly linked to the level of risk involved in an investment. If you aim to get a high return, then the risk will be higher than if you decide to start small. The choice will depend on the goal you want to achieve.
3. Define your goal
It’s different investing money to pay for your studies than it is to invest to afford a trip. As a result of your goal, you can take more or less risk. Make sure you narrow your target to see how much you might lose.
4. Investigate fees for money services
The investment involves an expense because it requires time. The banks and savings plans charge fees for the provision of services, like any other company. Should find out which costs the system implies that selected to invest, so you ensure that a flaw in the plan does not end with the return you were going to receive.
5. Select the system that best fits your financial objectives
Take advice about the different plans and your bank accounts offered to establish what fits your goals but mainly, your economic reality. Remember that the investment starts from extra money, not from a need. Usually an instant access cash account does not involve big changes in your economy and you can withdraw the money when you want it, so it is considered a safe investment if you have the perseverance necessary.
6. Ball of snowball effect
Study your salary in relation to your daily expenses to analyze if you are able to set aside a small sum each month. For example, analyzes whether to save 3% of your salary implies economic obstacles in your day to day. Being consequent you will get a snowball in a few months – small proportions that become a considerable sum – and perhaps you have managed a better administration that allows you to increase some percentage point of savings. Of course, the higher your income, the higher the percentage you can invest.
7. Stand firm.
Where investments give the expected results, even in small amounts, it is generated the temptation to withdraw money from the system in which it was placed to achieve profitability. Be firm with your decision and avoid using the invested money for other purposes, at least for a considerable time to not affect the growth we are experiencing.
8. Be patient and constant
The lack of immediate results frustrates first -time investors who want to see its evolution in the short term. The investments require a long time to achieve significant consequences and also a great deal of perseverance. So do not incursions into the world of financial profitability if you lack patience and perseverance.
9. Make a rhythm
It make contributions with a set frequency, it will help you achieve the consistency needed to accumulate money slowly. In addition, it is essential to follow the direction of your initial goals. Maintaining sound decisions instead of permanently changing your goals is the key to ensuring your resources increase as much as possible.
10. Avoid debt
Using money that you do not physically own to start your investment can generate the opposite effect. And the potential increase in your resources will become a debt. Any investment has an element of uncertainty, so study your resources and find out the available mechanisms.
11. Diversify your resources
Distributed among different products and asset classes money you want to invest. In this way, if an investment does not yield the expected results you will always have a plan B.