How do you invest your money?
Question:
While that's a good idea, many cannot save without reaching into the "piggy bank" every now and then. Heaven forbid there is a crisis in ones family and financial ends need to be met.
I think investing ones money now would be a great way to prepare for the future. I would like to know how would one go about investing their money and the best way to do so may it be stock, bonds etc.
Personally I like to save my money by keeping it in my pockets. Not only do I know where it is at all times, but it feels good there too:) Any advice from anyone?
Answer:
Your teacher's idea is good in theory. There are only a few problems with her advice.
1. When a crisis comes up, you will inevitably reach into your savings account to pay for the costs - whether it be legal problems or medical problems.
2. Banks pay such a small amount of money on savings accounts (like 1% these days) that your money will grow so slowly that it won't even keep up with inflation.
3. Saving and Investing ARE NOT the same thing. Saving is accumulating money for a rainy day. Investing is managing risk in a system with the probability that you will profit. Investing is almost like starting your own business, except without the work involved.
You need to read a book (or listen on tape) to "Rich Dad Poor Dad" by Robert Kiyosaki. You also need to read "Rich Dad's Guide To Investing" and "Cash Flow Quadrant" (by the same author.
If you read all of these books, you will learn everything you need to know about making your money grow - quicky. Instead of 1% , learn how to make your money grow at 20%,30%,50%, or even 100% per year. Learn what investments the rich invest in ...
Econimics teachers a good at following trends, but I know of very few of them who are rich. If you want to learn about investing -- ask an investor. If you want to learn about football, don't ask a banker or a brick maker ... ask a football player.
WARNING: BE CAREFUL WHO YOU TAKE YOUR ADVICE FROM !
I am from India and Indian stock market is booming. I am not a risk taker, I invest in mutual funds and take the market advantage. Its working for me :)
Stocks
Have money automatically deducted from your checking account or your paycheck so you don't see it. Then you won't be as likely to spend it. you must have an emergency reserve as well as a retirement plan. It is natural to take money periodically out of savings, you just need to put more money in than you take out. How you invest isn't so important at the beginning, the hardest part is putting the money away and having it stay there. Stocks are popular among young people, usually stock mutual funds. Don't make excuses, just do it. Start small and grow, don't worry about having a lump to start with, just do 25-50 per month and increase that as you get raises. BTW, you will need $1,000,000 by the time you retire to get a retirement income of only 50k per year assuming you have no pensions and SS isn't around. START NOW NO EXCUSES.
I my opinion saving should be integral part of life. as they say there are TWO truth of life death & TAXes. we could very well add the third on i.e. SAVING. Now the question is various ways to do that. One would first try to pay his debt then only think of SAVING. once you are debt free start exploring various optios of regular saving exaple: SIP with mutual funds, reccuring deposite with bank or post office. the idea is to cultivate habit of regular saving and discard the habit of OVER spending. in other words limiting the means.
keeping cash money in your pocket or anywhere is probably the worse thing you can do, because as you may already know that money loses value with time because of the inflation. therefore you need to invest it with a return of at least equal or larger then the inflation rate.
best thing you can do is to have the money taken from your paycheck before you see it. for example you can dedicate an automatic 10% from your paycheck goes to a 401k account, or if that is not available, i am sure many banks have some sort of saving accounts that you can add automatically to it every month with an OK return.
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