Saving and investing can be summed up in simple words: The income which you are not spending is called saving and purchasing things which tend o put money back in your pockets is known as investing. The amount that you are saving each month can be used to invest in order to yield greater monetary returns in the future. Generally the rate of return is proportional to the rate of risk. People usually invest in properties, shares, mutual funds, gold and bank deposits. You should consider the following things before converting your savings into your investment.
- Get a rough sketch of your financial situation: Figure out your goals and the amount of risk that you can afford to take. If this is your first financial decision/plan revolving around investments then it is wise to consult a financial expert. Although one can never guarantee you that you will reap monetary benefits from your investment but if you strategize well and come up with a solid plan, then in the long run you will enjoy the financial return.
- Pay off the debts and assess your comfort zone: If you are planning on investing then you need to clear off all your debts immediately. If your aim is to gain long term, then you should invest in assets which come with a greater risk like bonds, stocks instead of assets with relatively lower risk like cash equivalents.
- Keep an emergency fund: You never know when an accident or misfortune might occur. You may lose employment due to a myriad number of reasons, an accident being on the top list. You need a back up plan in case that happens and keeping your savings in the emergency fund would be a smart move for any investor.
- Research the companies: If you are thinking of investing in a company, you need to figure out which companies will cater to your needs. You should also pay attention to their recent performance and get a back ground check up done on the board of directors.
- Beware of scams and fraud: Often scamsters might put up advertisements in the newspaper with attractive and interesting headline luring in potential innocent and naïve investors. Do not fall into this kind of trap by becoming impatient an investing the first opportunity you get.
- Property is one of the most common and popular way to invest in. The cash comes in the form of rent or the increase in value of the property in future. Once you have bought a suitable property, taken in cooperative tenants and gotten all the maintenance work done, your work is more or less done. Also make it a point to compare cheap conveyancing solicitor quotes online. Although property investments are often referred as being safe as houses, there might be a few risks involved as is the case with every investment.1.The interest rates may go higher and so the money that you make from your property might get reduced due to this.2.Your lender might not cooperate in future and ask you to repay the remaining money (mortgage) and depending on the market conditions you might suffer monetary loss and not be able to cover the entire loan.
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