Financial literacy is unfortunately a topic that is not taught in schools and not a conversation that is brought up in most homes. There is a stigma around finances that luckily is getting addressed more and more often. Although a whole book could be written on the subject, we shall focus on what entails next in the conversation of finance and specifically investment. These can be classed into three subdivisions of: why should you invest, when to invest and finally how to invest. Being a financial planner can be difficult as well, but is do able in reality.
A. Why should you invest
Investing is the near perfect way to prepare yourself properly for your future. It guarantees a solid foundation on which to begin and live out your life. It enables you to make decisions based on the wants for your life such as when to retire and how to live out the rest of your livelihood.
2. Benefits you personally as well as future generations.
Almost all people want to have children. Investing is a way to ensure your family is taken care of as well as providing a spring board for your children to launch off from.
3. Risk management.
Investing could be considered the cure for risk. Life is like a roller coaster and as such, the lows of life can happen quick and unexpectedly. In the event you are unable to work or are unfortunately forced to leave your job, you have a nest egg to carry you through the transition period comfortably.
B. When to invest.
This particular area is largely dependent on your own personal goals and ambition. Although there is no perfect answer, the most appropriate would be to say that it is anytime. Specifically when you are able to earn an income. The magic of investment is in accumulation, which means you could start investing with the very least of amounts. As long as you apply the principles of patience and consistency, the rewards will surely follow. A good illustration would be to look at your investment portfolio as an army. A soldier can be used as the representation of a small amount, the more soldiers you add to your army, the stronger it will ultimately be.
1.Banks and interest
One of the most basic ways to invest is to simply save money. The way to increase the value of saving is through interest. Banks allow a percentage of interest to the money you save with them depending on the length of time it is kept with them. Savings accounts are specifically designed for the purpose of saving funds and thus are a safe route as a starting point.
2. Stock market
Another option for the more seasoned investor is to invest in the stock market. This involves investing in a companies’ stock with the hope that the stock/share price will rise thus growing your investment. Luckily investment firms and brokers have the knowledge and exist with the aim of assisting individuals towards arming them with the arsenal to take on the finance game.
Assets can be simply defined as anything you own. Investing in these assets, especially those that mostly appreciate in value such as land or houses is almost a sure bet. Due to their nature, you are guaranteed a return and they provide alternatives to do something else with them such as build an apartment complex to rent out.
Investing is a topic we should all know and it is critical information that must be discussed and passed on. It provides the basis of financial freedom and the opportunity to build wealth.