Have you ever wondered what to do with that extra bit of money you have in your savings account? The money you put aside for a rainy day, or that dream holiday. If invested wisely, it could be earning you even more money.
Investing is a great way to set aside and grow money you don’t need for day to day life. While you’re busy living life, that invested money will work hard for you so you can reap the rewards of your great financial planning in the future. Investing is a means to a happier, less stressful (money wise) future. The goal of investing is to put your money to work now, in the hopes of growing it over time.
What Kind of Investor Are You?
However, before you start investing your hard earned money, you need to know what kind of investor you are. Are you willing to take risks with your investments, or would you rather go low risk, with less reward? The more risks you take with your investments could mean you get a much better reward. However, this does also mean you could lose big as well.
Some investors will want to play an active part in managing their money’s growth. While others will prefer to leave it alone and forget about it for a few years.
Investing Through Your Employer
Generally, investing through your employer is a pretty low risk type of investment. It’s also a great option if you’re on a tight budget as you might be able to invest as little as just 1% of your salary. OK, so you would have to wait a while to get a good return on your investment, but you could use this as your retirement fund. Plus, you probably won’t even miss a contribution as small as just 1% each month.
Another great thing about investing through your employer is that they often match any contributions made. So instantly, your 1% now becomes 2% of investment. This is worth checking with your employer as it could be a great way of earning more money without really doing anything.
Diversify And Reduce The Risk
In a nutshell, by diversifying and investing in a wide range of different assets, you reduce the risk of losing everything. Remember the saying – don’t put all of your eggs in one basket. By spreading them out, if one goes belly up and you lose everything, likelihood is, the others will still be OK and you won’t have lost it all.
Investing in stocks is generally the most high risk way to invest as the market is so unstable. If this is an avenue you are looking to take, make sure you do your research first. Find the best trading app for you and do your homework to ensure you know the risks.
The Bottom Line
If you’re just starting out with investing, start with a small amount of money and see how you go. Then, in time, if you start doing well and get a better understanding, you can add more money to your investment portfolio.
However, there are often minimum deposit requirements, so look in to this before you start investing. If you don’t feel comfortable with the amount you’re investing at any time, stop!
The most important thing about investing is not to do it if you can’t afford it. For example, if you can’t afford to lose £100, then don’t invest £100. It’s unlikely you will lose all of it, however it does happen, especially when it’s a high risk investment.
Until next time.