Home » Investment » How to Invest Your Money the Right Way

How to Invest Your Money the Right Way

One of the most popular financial strategies to making money grow is to invest.  Many have the belief that investing involves great amounts of cash.  Investing isn’t only for wealthy individuals.  Shares can be bought for as low as $20.  It’s actually a good idea for new investors to learn by starting with smaller amounts.  Some people will invest in real estate and increase their profit by selling it themselves or going with a low commission real estate agent. This article will give you the steps and tactics to investing in the most safest and advantageous ways.

Preparing for Investments

There are a few important steps to take before investing.  The last thing you want to do is invest away all your life savings.  Prepare by setting aside amounts of money, after taking care of your living expenses.  It’s best to save a few months of additional living expenses. If you have high interest debts, check to make sure the interest rate you will be receiving through investing is higher than the interest rate of your debt.  If not, it would be wise to first pay off your debt.  Finally, it is important to learn about the numerous investment options before deciding on which is best for you.

Invest Your MoneySmall Investments

If you want to start off by investing low amounts, it would be best to look into Dividend Reinvestment Plans (DRIPs) or Direct Stock Purchase Plans (DSPs).  These allow you to buy stocks directly from companies without having to pay any commission.  It is important to take account of trading fees depending on whether you plan to trade often.  Another option would be to invest in mutual funds with lower minimum purchase requirements.

Investing in the Hundreds

If you’re looking to invest a few hundred dollars there are a few different options.  One option is to invest in an index fund1.  Mutual index funds track the market and returns a specific percentage each year.  Again you can find a mutual fund company yourself and you will not have to pay commissions.  Index funds give you the option to add money or stop investing at any time.  Make sure to look for index funds with a low expense ratio, in order to increase your benefits.

Another option is to purchase shares via a discount brokerage account.  This will work best if you plan to hold your investment for a few years.  With smaller amounts it is not best to look for profits via short-term price swings due to the commissions you will be paying.  You can also consider investing in a certificate of deposit (CD).  CD allows you to invest your money for a specific amount of time at a fixed interest rate.  CDs can run from months to as long as five years.  Since you are being paid interest for the amount of money you loan to this institution, the more money you invest, the higher the interest rate will be.

Investing in the Thousands

If you are looking to invest in the thousands you can also consider index funds and brokerage accounts.  If you are ready to invest a few thousand dollars, you will be able to pick various stocks to spread your money across in brokerage accounts.  You can also learn to make profit off short-term price swings.  If you are looking to invest $5000 or more you may also look into retirement accounts.

One of the main purposes of saving money is to invest.  However, since invested money is not always accessible at any time, it is important to make sure you set aside enough money to cover living and other expenses.  And, as we all know investing may also lead to money loss.  Investors should be able to handle money loss and should not invest their money if losing it will damage their life.

About the Author: Shahini Sirikantharajah is a contributing author to One Percent Guys. an agent for low commission real estate.  She is an engineering graduate who likes to write, perform research and help simplify the lives of humans.

Leave a Reply