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When Is The Right Time To Start Investing?
In this day and age, it’s no longer enough to have just one income stream. Your day job might be enough to pay for your monthly bills and recurring expenses. However, it doesn’t really provide you with enough allowance to prepare for rainy days, like health emergencies and household crises.
A lot of people will tell you that investing is the best way to earn passive income. Some would even say that putting your money in stocks and other assets is better than depositing it in the bank since the former offers higher returns, especially in terms of interest.
Investing has also been deemed as one of the 16 Proven Ways to Make Money Fast. The process has definitely become more accessible with the advent of several exchanges so that you can get started right away. Plus, these platforms ensure the liquidity of your assets, which means that you can withdraw funds when you need them.
The Best Time
One of the primary benefits of investing is that you can take advantage of compound interest. The element of time is crucial in ensuring that you get the most out of the money that you put into the stock market or foreign exchange.
The best time to start investing, then, is as soon as possible. Just like any other venture, however, you still need to prepare yourself financially. There are two steps that you should complete first before you can be sure that you’re ready.
First, you must pay off all of your high-interest debt, such as personal loans and credit cards. This way, you can save enough capital to start investing and receiving substantial returns. The second step also entails keeping a contingency fund in case of emergencies. It should contain a minimum of three months’ worth of basic salary, at the very least, in case you lose your main income stream.
After you’ve fulfilled these stages, you should prioritize your investments regardless of age. It’s even better if you start earlier so that you can set money aside for retirement and watch it grow through compound interest.
Investment Tips For Beginners
Aside from understanding how time is crucial for your investment, especially if you’re saving up for your retirement nest egg, you should get started right away. The world of stocks, bonds, and mutual funds may seem complicated, but you just need to do your research and equip yourself with knowledge as you move forward in your investing journey.
Here are two fundamental principles that you should be aware of:
- Know Your Options
Regardless of your saving goals, you should determine the investment types available to you, along with which ones work for your needs and preferences. Stocks are typically the assets that people think of when talking about investing. Also known as equities, they pertain to a share of ownership on a publicly-traded company.
Buying stocks entail purchasing individual shares. Their prices can range from single digits to thousands of dollars.
Bonds are another type of asset. Unlike shares in which you can technically own a company, this arrangement is more like a loan to a company or even a government office. You earn through interest as the entity pays you back for a certain number of years. They’re low-risk since you know when you’ll be repaid, but also entail low returns.
Mutual funds are a hybrid of investments that are packaged together. They are ideal for beginners because you avoid the grunt work of selecting individual stocks and bonds. Plus, they offer inherently diverse portfolios for the protection of investors.
- Determine Your Strategy
You should also develop an investment strategy so that you can handle your assets properly. If you’re looking for passive income, you can study the market to find low-priced stocks today and leave them to grow with the company, earning through dividends.
On the other hand, you can opt to become a day trader. This entails monitoring the market regularly, even daily, to check for price fluctuations and buying or selling accordingly.
Instead of depositing your savings in the bank, you may want to opt for investing them in stocks, bonds, or mutual funds. This way, you can take advantage of compound interest and get more value for your money than storing it with providers that offer minimal interest rates. Just make sure that you do your research before you dive into this venture.