Top tips for how to multiply your money. Where you should invest depends on why you are investing, over how long and the amount of risk you are willing to take. When investing on a monthly basis, it is best to have a clear understanding of what you are actually saving the money for. If your aim is to build up emergency funds or you’re saving for something specific and expect to spend the money within the next three to five years, savings accounts and cash individual savings accounts (Isas) are probably the best way to go. You should aim to make regular deposits into a cash Isa, where all interest will be paid tax-free. Justin Modray, director of Candid Financial Advice, says the golden rule is the same however much you invest: make sure you don’t bite off more risk than you can chew.
Peter Lynch famously spoke about “tenbaggers”-investments that increased tenfold in value. He attributed his success to a small number of these stocks in his portfolio. But this required the discipline of hanging onto stocks even after they’ve increased by many multiples, if he thought there was still significant upside potential. The takeaway: avoid clinging to arbitrary rules, and consider a stock on its own merits. There is no guarantee that a stock will rebound after a protracted decline, and it’s important to be realistic about the prospect of poorly-performing investments. And even though acknowledging losing stocks can psychologically signal failure, there is no shame recognizing mistakes and selling off investments to stem further loss.
The answer is by buying an index fund. Index funds are the best friend of the passive investor who want an easy way to invest in the market. An index fund is a type of fund with a portfolio constructed to track a certain index. Index funds can track the return of the S&P 500, Dow Jones, or NASDAQ. Index funds can either be exchange traded funds or mutual funds that hold securities in a given market. A S&P 500 index fund will buy shares of the 500 largest companies in the United States and will track the movements of the Standard and Poor’s 500 index. This fund will replicate the performance of the S&P 500 index. If the S&P 500 index is up 10 percent for the year then a fund like the Vanguard S&P 500 index or the iShares S&P 500 index should be up approximately 10 percent as well. Read more on Easiest Way to Invest Money.
If you’re on a tight budget, even the simple step of enrolling in your 401(k) or other employer retirement plan may seem beyond your reach. But there is a way that you can begin investing in an employer-sponsored retirement plan with amounts that are so small you won’t even notice them. For example, plan to invest just 1 percent of your salary into the employer plan. You probably won’t even miss a contribution that small, but what makes it even easier is that the tax deduction that you’ll get for doing so will make the contribution even smaller. Once you commit to a 1 percent contribution, you can increase it gradually each year. For example, in year two, you can increase your contribution to 2 percent of your pay. In year three, you can increase your contribution to 3 percent of your pay, and so on.
One of the best investment tips from Warren Buffett is to not put too much stock (no pun intended) into each and every news headline that you see. Buffett believes in the 99-1 rule. Most investors take actions based on 1% of the financial news they consume. Doing so, they quickly sell their stocks whenever bad news comes up – e.g. a company’s revenues have fallen by 10%. If the company in this particular example has been in business for, say, 100 years, then Buffett says that it’s definitely capable of withstanding such events. In other words, people often tend to overreact.
About MultiplyMyMoney : I have more than 12 years of experience as an independent and personal financial and investment consultant. I used to run a financial blog called BuylikeBuffett which provided insight on investing, saving, money management, and all things finance. I am also the author of Your Financial Playbook: A Guide To Navigating The World Of Personal Finance a financial guide written to inform the beginning investor about the basics of the market. I decided to start a new site because I receive a great number of questions about financial topics on a daily basis. I figure that this would be a great way to answer those questions and increase financial literacy. I also figured it would be a good platform to write articles on everything from teaching how to get rich, explaining the basics of cryptocurrency, to detailing ways of rebuilding your credit score. I was the founder and president of New Horizons Financial Management, LLC, and was a registered investment advisor. New Horizons was an independent investment advisory asset management and personal financial consulting firm offering investment advisory services to high net worth individuals. Read extra details at Learn how to multiply my money.