When I was in my early 20s, I listened to most of the people who said, “Money doesn’t grow on trees,” Don’t waste money,” and “Save money as much as you can,” but they were a little bit wrong because when you save it, it loses its value. Every year inflation increases, and the value of savings may decrease or remain the same. That if you save, you still do not become rich.
Well, I think most of the middle-class families save money and very rarely invest money in real estate, but they never invest in stocks or bonds. I don’t know why; they don’t invest money. Well, if money doesn’t grow on trees, with the right strategies it can grow in your portfolio.
In this blog, I guide how you invest your money wisely and how I invest my money. What is most recommended by most of the rich people, and what points must be noted while investing your money? “Let’s decode the path to financial freedom!”
Why Investing is Crucial?
Well, have you ever questioned yourself, “Why?” Successful people recommended you invest your money instead of saving your money. Have you ever asked? yourself or discuss with anyone why you don’t achieve financial freedom with saving money. Why is it only possible with investment? Well, if your answer is “NO,” then you are in the right place here. I explain everything about investing.
If you don’t know why investment is important, then the simple answer is, “If you invest your money, it covers the effect of inflation, and every year your money keeps growing,” “whereas if you save your money instead of investing, then your money loses its value due to inflation”.
So, I hope you know why investing is crucial, and other main questions arise: where and how do you invest your money? If you’re a beginner, then you know about everything about investment and growing your money.
Step-by-Step Guide to Investing Money
If you know the importance of investing, then the question of most of the audience is how we invest money. Well, this step-by-step guide will help you with how you invest your money.
Step 1: Set Clear Financial Goals
- Short-term: In the short term, this mainly includes your emergency fund and vacation.
- Medium-term—In the medium term, which mainly includes buying a new house and car
- Long-term: Long-term, which mainly includes retirement and wealth accumulation
If you know for what you invest your money, then it becomes easy to invest because some give returns in 3 years, 5 years, or more than 5 years. Before you invest your money, you have a proper plan for what you invest, and then you invest your money.
Step 2: Understand Risk and Your Risk Appetite
When you know what you are investing in, the second most important part is how much you invest; well, this is your choice: some invest 20-30%, some more than 30%. In my opinion, you invest money based on how much risk you can tolerate; like if you are younger, you invest more than a married person or senior citizen.
You have to calculate how much you invest money and keep daily need expenses or emergency funds, which amount is left beside that you invest. Investment is not a game of 1-2 years.
Step 3: Build an Emergency Fund
As you know, investment is not a game of 1-2 years; minimum you have to keep it for 3-5 years; on the other hand, you don’t know when an emergency will arrive.
In your opinion, you should keep the emergency funds aside before investing some amount of your monthly salary/income. Even if nobody knows when an emergency will arrive, if you have an emergency fund, it will help you a lot.
Step 4 Learn the Basics of Investment Options
Well, there are so many options, but these are most recommended by rich people and followed by many millionaires. These are
- Stocks: High risk, high reward
- Bonds: Lower risk, steady income
- Mutual funds/ETFs: Diversified portfolios
- Real Estate: Long-term growth and rental income
- Cryptocurrencies: High volatility but potential.
If you want to invest in crypto, then go through with the given link below on this blog:
Step 5: Choose the Right Investment Platform
The right investment platform also matters in investing; if you choose the wrong platform, you will probably lose your money, or due to high charges and hidden charges, the platform will take a huge amount of your investment.
If you want to start in stocks or crypto, you have to know about the platform, their fees, or if there are any hidden charges of the platform. If you ask me, I will provide a link to a trustworthy platform at the end of this blog.
Common Mistake to Avoid
If you are a beginner in investment or just invest, you have a high chance of doing these mistakes; if your answer is “YES,” then you have to improve them as soon as possible; otherwise, you lose money in huge amounts. Most mistakes I describe.
- Emotional Investing: Well, emotional investing is very common in beginners because they invest according to their emotions and don’t do proper research; after that, they lose all their money and then blame the market. If you do not control your emotions, then investing is not recommended to you.
- Lack of Research: If you are a beginner, then this mistake is highly made by you. Please improve this mistake before making any big loss. Lack of research is mostly common in middle- or poor-class people because they just start investing from other advice and do not do their own research. If the return is good, then they are happy; if due to some reasons the return is less or bad, then they start blaming the market, calling investing gambling. So, avoid this mistake also.
- Ignoring Fees: Well, if you just start investing in crypto, stocks, bonds, and any other thing, you ignore the fees and also do not know about their hidden fees. When you withdraw or sell your stock, then your high percentage of profit goes in fees.
- Putting all Eggs in one Basket: Putting all Eggs in one Basket means investing all your money in one stock or crypto. If, due to some reasons, that stock or crypto falls, you lose your whole money, and then you start blaming the market like a nonsensical investor who does not know about investing.
How do the rich invest money?
Most of the middle- and poor-class people think about how they invest money and how they earn so much money. Well, the answer is very simple: they just invest their money in different assets, whereas middle- or poor-class people put all their eggs in one basket.
They also have the same option to invest, which I mentioned above, but the difference is they invest money with proper planning, and middle-class or poor-class people invest with other advice, which results in loss, then start blaming the market or call it gambling.
If you want to invest like the rich or like a pro, then you go with proper planning and a proper percentage of investment in assets. Investment generally depends upon your income or salary; most of them have high incomes, so they invest large amounts of money, whereas others have less income, so they invest less. But it depends upon you.
Real-life success stories
Well, I describe some real-life stories, and you get an idea of how investing affects the long term and covers the effect of inflation.
Story 1: Well, there is a schoolteacher who invests $1000 from his monthly income for 10 years. Well, he is a well-paid college teacher, so he starts investing in stocks for 10 years, and he just invests $1000 per month. As for his risk capability after 10 years, he gets the best return on his investment for 10 years, and he earns $173,085 on his $1000 investment done every month.
Story 2: The previous story was about a teacher, but this story is about a teenager who studies in college. Well, he invests $100 every month. Yes, $100 all through, he is a teenager, and there are so many other expenses, so he just invests $100 in stock for 20 years. He also achieved a great return on his investment; for his 20-year investment, he got $52,000.
There are so many stories where people get great returns on their investments. I hope you understand how investment is effective in the long term.
Where and How You Start Investment
If you seriously want to invest your money, then first you know where you want to invest, which means where you want to invest your money, like you invest in stocks, crypto, or real estate.
If you just start, then I highly recommend you invest in bonds or mutual funds, which have less risk and average returns. After that, you can invest in stocks, crypto, or real estate as you want.
At last, money is yours; you invest where you want but never invest without research or with any advice you get from anyone. Invest with full knowledge. So now the other question is how you invest your money. Well, if you want to invest in crypto, you go through the website; you reach these through the below link. These are trustworthy websites to start your investment journey, but as I say to you again, before investing, go through the charges/fees of these platforms.
For crypto investment—
LINK – https://www.binance.info/activity/referral-entry/CPA?ref=CPA_00PXDZN8TU
Final Through
“Rich people are often creative and take calculated risks.”
At last, I just want to say if you want to start investing, invest like a pro or like rich people, not like a nonsensical investor who invests without knowledge.
Before investing, get proper knowledge of where you want to invest, how much you want to invest, and from which platform you invest—their hidden fees/charges. Investment is a skill. The more you learn about this skill, the more profit you get in investment. There is no limit to learning in investment; it all depends upon you how you invest or where you invest.
If you want more knowledge related to investment or making money, reading is also one of the best ways to gain knowledge and recommendations by experts. Top book link below, which you definitely read
LINK – https://amzn.to/3BPEyKc
LINK – https://amzn.to/4iV6Kf5
LINK – https://amzn.to/49YIsgh
If you like this blog, then go through with other blogs; they also provide value —
BLOG 1 – https://luminateyourmind.com/how-teenager-earn-money-what-expert-recommend-on-it/
BLOG 2 – https://luminateyourmind.com/how-to-invest-in-crypto-and-what-expert-recommended/