We all know how important it is to actually have a budget (and stick to it) and we’re all familiar with the concept of having an emergency fund set aside, but how many of us are actually worried about our future beyond having that budget and the emergency funds? Unfortunately the answer is not too many. Too many of us are planning to rely on things like the Social Security payments that we’ve paid in to take care of us when we get older. Like it or not, Social Security is pretty well broke and by the time that thirty-somethings are old enough to be eligible, it will likely be nothing more than a distant memory. What does that mean for you? It means that looking forward and planning for our retirement has never been more important than right now and a fantastic way to do that is to learn how to invest your money.
I know that it is incredibly easy to allow yourself to forget that someday you’ll be older and will eventually stop working. No one wants to think about getting older, right? If you don’t though, you will eventually find yourself in a bad spot. Besides, name one person that you know who wouldn’t want to build enough wealth for themselves that they could live comfortably enough to not have to worry about things? Learning how to invest your money can help you do just that. Build enough wealth that you won’t have to struggle.
How to Invest Your Money – 6 Easy Ways to Invest
There seems to be this huge misconception among families that you have to make hundreds of thousands of dollars each year to invest. That myth is only partially true. It’s easy to just jump right in with a huge amount to start. Where the misconception goes wrong though is that little income and little investments are great for smaller budgets too. I actually think it’s a bit better to start small when it comes to investments. You won’t earn as much of a return, but at the same time, you’ll really be taking the time that you need to properly learn how to invest your money before you start playing with bigger dollar amounts, especially if you start with these easy ways to invest your money. Especially if you take into account that you can actually get a tax break when you open one.
Invest your money with a company 401k or IRA
It might seem like common sense, but you would be surprised at the number of people who don’t actually use their companies 401k plan. If you’re not using yours, it means that you’re not only missing out on investing your own money, but also any matching contributions that your company might add. What that means is that if you work for a company that matches and you invest 3%, your company will invest 3% as well. This can be a fantastic way to invest without it really costing you any extra money. The one thing you’ll want to make sure of is any early withdraw penalties in case you leave your currently job and you’ll want to check if there is a cap on how much your company will match. If you’re self employed, opening up an IRA is a great way to capitalize on this too especially since having one can help you save on your taxes. Picking up a book on how to invest your money in a 401k or IRA can be a great way to learn what will happen with your money as you’re paying into your account so that you aren’t completely in the dark.
Invest your money in real estate –
If you’ve got some extra, investing your money into real estate can be a great option. It is however one of the more risky options. You will run the risk of investing into what is known as a “money pit,” before you sell or if you’re looking to rent the home that you’re flipping, bad tenants and potential home damages. The key to using real estate as an investment is to purchase a home at a low rate that will either make you a significant amount should you decide to flip it and sale or bring in a steady rental income. If you’re planning on selling your flip, you’ll need to check the local markets in your area first. If homes aren’t selling, this probably isn’t the best option for you. If you’re planning on renting it, be sure to check your local and state landlord/tenant laws to make sure that you are ready to handle any situations that may pop up. If you want to know more, there are quite a few awesome real estate investing books that can walk you through the entire process from start to finish.
Invest your money in a CD –
Opening a CD or certificate of deposit is generally considered one of the more safer ways to invest, but it will also give you one of the lowest returns. Basically when you open a CD, you commit your money to the investment for a specific period of time. It could be as low as 6 months or as much as 5 or 10 years. Most CD’s offer a higher interest rate than a regular savings account making them great for folks who want to invest a little bit but don’t want to have to constantly monitor that investment. With a CD, usually you will get a higher interest rate when you commit to a longer time period than you will with a short one.
The catch with CD’s is that once you open yours and fund it, you can’t remove the money until your time period is up. You can deposit money of course, but removing your money may result in high penalty fees. This is because they’re intended to be funded only and left alone to accrue interest. CD’s can also be a great way to save money for your kids in a way that will earn more interest than a regular savings account.
Invest in Precious Metals –
Precious metals like gold or silver carry quite a bit of value, however, they are subject to really frequent value changes and sometimes those values fluctuate as much as hundreds or thousands of dollars per troy ounce. You can either choose to buy and sell what they call “junk” silver or gold which are things like necklaces and rings or you can buy gold or silver bullion in the form of coins or bars. If you do decide to invest your money into precious metals, be sure that you do some research on the current markets and know the risk involved. What a lot of precious metal investors do is to buy their metals when the prices are low and hold onto them until they go back up like with any investment. When buying gold or silver, be absolutely certain that you buy from a reputable source. It’s too easy to fake gold and silver and that would only mean wasted money for you.
Invest your money in a Money Market Account –
A money market account, like a CD is basically a higher interest rate savings account. The difference between the two is that a money market account allows you to withdraw your money should you need to do so. Money market accounts generally have a much lower interest rate than CD’s though so your money will not grow in quite the same way. They have no time commitments when you open a new money market account and can usually be opened with a much lower opening deposit as well making them great for families who are just starting their road to savings or are looking for a safer way to grow their savings. We actually keep all of our savings funds in money market accounts since they have a higher interest rate than a regular savings account.
Use an app to learn how to invest your money –
Apps like Acorns are great for people who are just learning to invest their money. They connect to your bank account and make regularly scheduled deposits into your investment fund. You can withdraw the money anytime you want back to your checking account. There is no management really needed aside from answering how aggressive you want them to invest your money since they do all of that work for you. We actually use Acorns on top of our regular investments in conjunction with Digit. We take the money that we save with Digit and transfer it into Acorns so that it can grow even more toward helping us with those really big dreams that we have.
Learning how to invest your money doesn’t have to be hard, but I do want to caution you, if you’re looking at investing in any other way than with a CD or money market account, do your research. The last thing that any of us want is to invest money only to lose it. If you’re using an app besides Acorn, make sure it’s totally safe. I can vouch for Acorns and Digit, but I can’t any others.
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