How to Invest Money and Make It Grow?

Before Investing Money

Before you invest money, make sure you have prepared the following important things. Make sure you have paid all your debts or liabilities. Make sure before you invest you have your cash reserve or the emergency funds needed to help you in case there is an emergency so that you will never pull out your investment.

The ideal amount of emergency funds should at least 3 to 6 months of your income. So, if your income is $2,500 per month. You should have $15,000 emergency funds good for 6 months.

You should also have to buy a life insurance. A life insurance is for protection. You need life insurance just in case something bad happened to you. Life insurance can help your family to recover from financial losses in case you died.

The ideal life insurance coverage should at least 3 years of your total annual income. If your annual income is $60,000, you should buy a life insurance that has a face amount of $18,000 good for 3 years to help your family to recover from financial losses.

After you have paid your debts, have emergency funds and bought insurance, it’s time to know your risk appetite.

 

Know Your Risk Appetite

It always depends on your age, of course if you’re still young, you can take high risk and for mid 40s to 50’s you have to take medium risk and for 50s and above, they should only take low risk investments.

For low risk investments, money market funds, time deposits and bonds are appropriate investments.

For medium risk investments, combination of bonds with equities are appropriate investments.

For high risk, you can choose to invest purely on stock equities.

 

Make an Investment Goal

After you analyze your risk appetite, you have to make an investment goal. What is an investment goal? It is goal wherein you should know the purpose of your investments, how much should your investment cost your every month or annually. When should you start investing and when is your plan to redeem your investments.

 

Take Investing Action

A plan is good if you work for it. You can never see a result of your investments if you didn’t work your plan. You have to take action, just do one thing at a time. From opening your investment account, funding your investment account. And if you choose to invest in the stock market, you should buy your first stocks, you don’t need to be afraid. All is easy especially if you really want to grow your money. Just ask the financial advisor or financial experts, there are advisors in the bank or any financial investments firms.

 

Achieve Financial Freedom

Saving is good because it will teach you the habit of managing your money. If you are disciplined money saver, you will also be a disciplined investor. Ste aside money from your salary or income every month and fund your investments account such as mutual funds, stock broker account or fund your savings account intended to use as a business capital

Article Source: EzineArticles.com

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