Investment advisor and entrepreneur, Robert G. Allen once said, ” How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” This understanding of saving and investing is crucial for those seeking to acquire wealth.
Savings accounts are excellent for storing money you need in an emergency (which everyone should have). However, if you want to maximize your money, you have to make it work for you, and investing is the best way to do that. How do you harness the power of investing? Let us help you get started below.
Save, and Then Save Some More
While saving alone is not going to make you rich, getting in the habit of setting money aside for investing is key to getting started. So, in addition to the money you put away for your emergency fund, begin setting aside the same amount, or what you can afford, for an investment fund. Some investment accounts have minimum balance requirements for you to get started. So, start getting in the habit of saving money for this purpose.
Don’t Be Afraid to Learn Something New
Investing may seem intimidating, but the more you know, the more you will feel comfortable getting involved in the process. Begin looking into popular podcasts that discuss issues related to saving and investing. Also, my book, Investing Success: How to Conquer 30 Costly Mistakes and Multiply Your Wealth can give you some valuable insight into how to begin the process of investing. Many times, you don’t need to get into the weeds; focus on the basics. Begin to look into the meanings behind stocks, bonds, and types of investment funds like mutual funds. Also, refresh yourself with ideas relating to compound interest, inflation, and the various types of stock exchanges.
As you are saving up that first $5,000 or $10,000, you can start getting a stress-free preview into how investing works. Begin using micro or Robo investing apps like Acorns, Stash, or Robinhood. These platforms allow you to begin investing with smaller amounts of money. While these accounts may not yield a lot in the short-term, it will give you an introduction to how compound interest works as well as selecting investment accounts that fit your long-term goals.
Establish Goals and Select an Investment Approach
What are you hoping to get out of investing? Do you want to use it for retirement, or do you want to grow your money to fund a down payment for a home? Establish goals for your investments and then create an investment strategy based on your objectives. For example, if you are investing for retirement, you will want to pick a collection of stocks and bonds that get you where you want to be over a long period.
On the other hand, your stock portfolio will look drastically different if you want to grow your money in a shorter time. So, understand the various types of investments that are available. You can then create an approach that helps you reach your savings and investing goals.
Saving and Investing: A Two-Pronged Approach
Saving is a necessary financial habit to conquer; however, if you want to achieve wealth, you can’t stop there. If you’re going to make your money work for you so you can financially thrive, then investing has to be a part of the picture. There is a risk as well as a potential reward associated with this process. The more you know, the more of a chance you have to put yourself in the position to come out on top when it comes to saving and investing.