Investing money wisely is a task to achieve, but with good knowledge and patience, everyone can learn all about investing money wisely.
It is not important that your salary is high or low but everyone should focus on at least small investments as soon as they start with their jobs.
If your income is not high then ensure that you still try investing some part of your money, as after many years you will see the benefit of investments.
There are stories that people turned millionaire just by investing in stocks overnight, but those stories are rare.
One can become a millionaire by approaching a good investment plan. The following mentioned are few best ways to income investing for beginners.
Income Investing Guide for Beginners:
1. Prevent investing into individual stocks:
If you find that one company is doing the profit and you think to invest all your money into it, then stop there. Do not invest money into one company, always invest money across few companies.
Stocks are an unpredictable source of investment but are also profitable at times, therefore, putting all your money into one company might lead to a loss.
Also, prevent from investing all your money in stock and spread your investment across various other money saving plans.
2. List the investment requirements:
Before investing into anything, it is important to note what are your requirements for the investment.
For example, retirement, emergency or insurance or tax saving benefits. Knowing what you are looking at will give you a clear picture of where and how much is required to invest.
This also includes your various insurance plans like health insurance, which is helpful during the medical emergency.
Talk to your HR department and know what are the investment plans they are providing. So, gain the right information and invest accordingly.
3. Invest in tax-free money:
With so many tax benefit schemes going on, find the right one for you and invest in it. This will save you lot of money from tax deduction and will also add as your own saving.
There are various types of tax saving investments available, therefore, consult a financial advisor to guide you towards the best one.
For example, if you have applied for a home loan then ensure to add it too, while filing your taxes.
4. Real estate investing is a good investment:
Once you have settled out all your investment plans, probably in later stages you can decide on to investing in real estates. It is also an old-fashioned and one of the most popular form of money investment.
By purchasing a land or a house will benefit as after few years the price for the same place will go up. The chances of the land price going down are generally low and is always a long term investment.
In case you are not staying at that place, then the house can be given on rent and it will furthermore will be an additional source of income.
5. Don’t invest without complete knowledge:
If you are not sure about something then do not invest your money in it. Without correct and complete knowledge you might plan your investments incorrectly and might lose money rather than saving.
If you are not sure about it then consult a financial advisor who can guide you to the best saving practices going on, which will include various offers from the government too.
An adviser will be a guide for you who can help you know which will be the best investment plan for you depending on your requirement.
6. Invest in retirement plans:
One cannot work all through their lives and when the person gets old the physical energy is reduced and various kinds of illnesses tend to come.
Therefore, thinking about retirement is of utmost important and one should start working for it as earlier as possible.
Retirement investment plans should be the top priority in your investment list and then accordingly one can look into other types of investment.
Ensure that you keep on analyzing your retirement goals and investments, as with time your salary increase keeps on adding increasing the money into a retirement plan.
7. Plan at least 15% of your income investments:
Always plan that about 15% of your salary is being invested every month. This money will add up over the years and will provide you huge investment returns later on.
The best practice is to get an automatic deduction from your paycheck into your investment plans since doing it manually might lead to delay and forgetting it to do it.
This is a disciplined way to do it where you just need to set it up and even if you forget to save, it will be happening automatically.
8. Create an emergency fund:
Emergency funds are important to create which should be there at any given point of time, this is the savings which are not invested.
Emergency funds should have about 3 to 6 months of money at any given point of time, just in case if something comes up then you are ready to tackle it.
Ensure to split your savings into emergency funds and savings, since this additional money comes in handy in unsaid situations. Always ensure not to spend the emergency money until and unless it is truly an emergency.
9. Increase the range of investment plans:
With so many best investment options available, put your money into various plans and prevent from sticking to only one form of investments.
The range should be from government saving plans to stock market and mutual funds to fixed deposits and various taxing saving plans. The more you expand your investment range higher are the chances of returns and it reduces the chances of loss.
Increasing the investment range will help to earn money from various sources and will keep your money secure.
10. Prevent debt:
The essential and most important part of planning is to ensure to keep yourself out of debt. If you have any kind of debt, for example, college loan or anything else then, do your best to clear your debts as soon as possible.
Since, debts are the biggest loophole in your saving plans which take up most of your money. Until its necessary, prevent yourself from acquiring a credit card, since without realizing one tend to pay more into them.
11. Prevent from ads:
There are so many ads going around which talks about investment being fun or portray them in various other emotional factors.
Prevent yourself from getting into any kind of investment plan just by following the advertisement. Since investment requirements vary from person to person hence, it should be done only considering your own personal requirements and your capability to invest.
Also, check your investment once in a quarter rather than on daily basis, as some takes the time to grow and constantly checking on it might lead to unnecessary stress.
12. Invest with patience:
The important thing to note is that investments require a lot of patience, one won’t be able to generate revenue in few days, it requires years to get the good money.
Sometimes the market might not be right and the value might seem low but over the period of time, the same invested money will lead to profit.
Hence, look for returns for the longer period of time and invest accordingly.
13. Prevent extravagant spending:
Spending money on luxuries is common when a person is in the early twenties where financial independence is new and the power to spend money is in their own hands.
It is good to enjoy your hard earned money but ensure to prevent yourself from spending unnecessarily or impulsively.
Just by taking a sensible decision of saving the money and investing it into a good plan is a better decision. Since, impulse spending leads to regret later on but a good saving decision will lead to mental peace and satisfaction.
14. Learn about compound interest:
Learn as much as you can about compound interest and invest your money into it, as it is an easy way of earning money over money.
For example, if you have invested Rs.1000 in the stock market and the dividend on it is 5%, then by the end of the year you will have Rs.1050. While investing the same money next year will add up to 5% which will be now on Rs.1050, hence by the end of the second year it will be Rs. 1102.50.
Investing money in the right place at the right time always provide profitable results. It is also the source of financial back up which is helpful when you retire or during any emergency. Sooner you start investing the better it is, later on, you can plan for purchasing a house or a car. But to achieve this, one need to have clarity towards the investment plans available and keep themselves updated with the new plans coming up.