There is one event that every teenager and 20-something has experienced in his or her life – having too many days in the month and not enough money. This phenomenon occurs when you have exhausted your allowance or income within the first few days of the month and have little or no money for the rest.
Countless scholars have emphasized the importance of saving money. Stashing away a little extra cash will always prove to be beneficial. Often the hardest part is the beginning itself. So, we bring you quick tips about saving your money and how to invest money wisely.
Tips to Save Money:
•Whether long-term or short-term, setting a goal gives you an endpoint.
•Keep a track of your expenses to figure out which ones you can cut down to start saving.
•After setting a pre-defined goal form a budget and stick to it to limit spending.
•Pick the tools for saving based on your goal.
•Start investing! Goal oriented investments also count as savings. If you’re a newbie with little knowledge about how to invest money, the next section is for you.
How to invest money wisely?
When you don’t have a financial background, figuring out how to invest can be challenging. There is no defined answer to the question ‘how to invest’. Investing requires discipline and practice. Therefore, financial advisors often recommend beginners to start with the basics. Learn the terms and rules related to trading and investments. Once you get a hang of the basic terminology and investment avenues, you will understand how to invest money and where to invest in order to make more.
Here are some quick tips on how to invest!
• Avoid investing in something you don’t understand. If you’re unable to understand the basic concept behind a certain kind of investment
• Disciplined, periodic investments will take you to your goal quicker. Set aside a fixed percentage of your income that will be automatically redirected to your investments.
• Always remember that there’s no downside to seeking advice. A financial advisor with expertise in investing and trading will guide you better.
• Based on your risk profile and goal, you can always investment in more than one avenue. You can always employ the services of professionals to help you set up a diversified portfolio.
• Be patient. The longer you invest, the more your investments will stew and the chances of higher returns will improve.
Where to invest?
Now that we’ve shared our tips on how to invest money wisely, next on the agenda is where to invest money? Before you decide where to invest, identify your investment goal, your time horizon and the risks you are willing to take. Pre-determining these will help you in choosing where to invest. Your current financial status also plays an important role in choosing where to invest. If you’re a student on an allowance or a part-time job, chances are the amount you can spare for investing will be less. Below are some options where you can invest:
1. Stock Market: This is generally the first option that comes to mind when discussing where to invest money. As you know, stocks are securities that signify ownership in a company. In simpler terms, when you buy a company’s stock, you buy a small portion of that company. When the company profits, so do you.
2. Mutual Funds: Mutual funds are investment vehicles which collect money from various investors and then invest the pool of money in different securities. Here, you have the benefit of investing in a basket of stocks rather than just one. You can opt for lump sum investments or SIPs. (link to article about SIPs)
3. Savings account: Savings accounts are by far the least risky means of investing. You simply set aside a portion of your income and deposit it in a savings account and allow it to collect interest. There is little to no risk here. However, correspondingly the returns are way low as compared to any other form of investment.
Investing doubles as a means of saving as well as a form of income. Follow these tips on how to invest money wisely and where to invest money to become successful at both!