17 Jul How to Make Successful Investments
It’s the word on everyone’s lips: invest. Any and all financial advice seems to highlight and promote investments of all types. But, when it comes down to it, the question of how to make a successful investment can leave you scratching your head. Investing might seem like a big leap from just stowing your money into a savings account, but at the end of the day, it’s the best thing you could do for your financial health. Here’s some of our best advice on how to make the most of your money through smart, successful investing.
Putting your money in a savings account and leaving it be is a safe bet, but wouldn’t you rather see that money grow 10% instead of 2%? By continuing to invest, annually or monthly, your money can grow more and leave you with a comfortable nest egg. Not only that, but putting aside a little money each month can start a habit that promotes financial prudence and sets you closer to your goals.
Don’t be general – make specific, numerical goals that motivate you to keep up your investing. You’ll be more motivated to invest if you have a set goal that you’re working towards – a finish line of sorts. Anything from planning your dream vacation to buying a house to settling down can serve as a financial goal. Different goals have different risks that you’ll want to take, too, which can influence how you want to invest. For long-term goals, like retirement or college tuition for your kids, you can take a higher risk approach, but for a summer vacation to Hawaii, you might want to play it safe.
Keep Risk Manageable
Risk is a major factor in how you’ll want to invest; stocks can provide huge rewards for huge risks, while bonds are a guarantee. Important factors are age, goals, and income, which influence what type of investments you’ll want to make. It’s all relative, but the general rule of thumb is that you don’t want to risk if you can’t recover from it.
The most important tool to your investment portfolio is diversity. The best type of portfolio has a mix of holdings, whether it be real estate, stocks, bonds, or cash. Again, it’s all relative to you and your goals, which is why it’s so important to set them. Each type of investment has its own risks and rewards, which is why a successful investment is one that spans the spectrum.