Before the global recession hit, opportunities were abundant across the globe. Careers in different industries were flourishing, wages were more than sufficient, and the fear of getting laid off from your only source of income was only conceived by the most skeptical of people. Today, the work environment has taken a drastic shift downwards, with unemployment remaining at high numbers and hundreds of businesses still unstable.
Becoming smart about how one handles money is no longer a hobby that’s reserved for past time or something only financial advisers and money managers are required to engage in. It is a task everyone needs to practice on and hopefully master. Fortunately, you don’t need to a bachelor’s degree in economics, finance, or business management to intelligently and pragmatically develop sound investment skills. Here is a crash course for smart investing and how one can transform their minute bank savings into a steady growing retirement fund.
Tip#1 Create a Plan
A commonly overlooked aspect of investing is having a plan. Because investing is something you can do by yourself and without a boss or critic restricting your every move, most people dive into the matter without a plan as they feel free and unaccountable. An investment portfolio that lacks a properly laid out plan, however, can spell out disastrous consequences in the future. You may find the returns inadequate for your retirement lifestyle or see the profits disappear because of inflation and taxes. By establishing rules and executing a detailed plan of your investing strategy, you can at the very least get an idea of how much you can make and how long you will have to hold it before finally withdrawing the funds.
Tip#2 Go For Steady Growth
Greed is a common characteristic of human beings. People want to get what they desire in the fastest and most lucrative way possible. Most investors start participating in the markets expecting to make significant percentage gains on their investment within a few years. This is indeed possible, but if you’re not as great of a stock picker as Warren Buffet, you may find yourself with a portfolio that will generate small returns even after a long holding time. Stick with stable companies like utility service providers and home construction companies. These industries will never go belly up as they are needed by society to function properly.
Tip#3 Add To Your Investment Portfolio
Compounding is a powerful thing in business. Without getting into the math, compounding results in higher return on your investment over X period of time. But to successfully compound, you must have unshakable discipline to not withdraw the investment once it matures. Instead, reinvest it for further gains. Make it a habit to add to your portfolio at least twice a year. Buy more stocks or diversify with other investment vehicles. Identify what best suits you – either a high risk/reward portfolio or more of a long-term stable growth selection. The former should be pursued by those who already have investment background.