In order to be successful, you must invest with your goals in mind. Investing is an important pillar of one’s financial plan. As you save, you need to invest so that inflation does not eat away your money’s purchasing power. Always remember the time value of money. Plainly stated, the value of a dollar today will not be the same value one or two years down the line.
The sequence below can be used as a guide to achieving your goals
1. Ensure that your family has adequate health insurance
If you are the breadwinner, life insurance would be most appropriate. Uncertainties such as illnesses or accidents are likely to incur huge medical bills, thus wiping out your investments. In such instances, some people are forced to sell their property and valuables at throw away prices to offset such bills.
2. Accumulate emergency savings before you invest
When an urgent need for money arises and you have no savings, you might resort to liquidating your assets due to desperation.
3. Pay off all short term high interest personal debt
Imagine investing while incurring debt interest higher than your investment. Sounds crazy? Yes, it definitely is! That can be likened to pouring water into a bucket that is leaking. Seal those holes and you will have your bucket eventually full.
Speculation is one thing that some people find attractive. However, if you choose to speculate, do so with money that you will not mind losing, lest your financial objectives suffer.
Investment fundamentals are key in ensuring your hard earned savings do not go up in smoke, and a few concepts to understand include:
knowledge on taxation rules can aid in deciding where to invest because taxation has a huge impact when it comes to any return on investment
- Interest income is taxed
- Dividends from stocks are taxed
- Life insurance premiums qualify for an income tax
- Rental income is taxed
2. Tax advantaged investments
This is one of the secrets in investments for example the registered retirement benefit scheme. Money in such a scheme grows tax free until you withdraw it.
Every investment has a risk. It is important to be aware of the risks that pose a threat to your money and the steps that can be done to minimize them.
4. Compound growth
If you own stocks, purchase more so as to achieve compound growth. Why should your money sit idle? It should never!
5. Investment alternatives
The investment arena is always one characterized by mystery. You need to develop a personal investment plan, know your risk tolerance and invest accordingly with your goals in sight.
In conclusion, always remember that the world’s best investment is personal development.
other valuable tips:
Now that you know some of the specific steps to take, are you just going to stand there staring up the steps or are you going to step up the stairs? Feel free to share this article with your fellow friends on Facebook, Twitter, Instagram and all other social media platforms.
A lot of people are making unwise and uninformed investment decisions and as a result, end up not maximizing their investment potential. Sharing these essential tips highlighted in this article will help make you and others better investors.
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- Burton G. Malkiel
- W. W. Norton & Company
- Kindle Edition
- Allan S. Roth
- Publisher: Wiley
- Edition no. 1 (01/25/2011)
- W W Norton Company
- Burton G. Malkiel
- Publisher: W. W. Norton & Company
- Benjamin Graham, Jason Zweig
- HarperCollins e-books
- Kindle Edition
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