Don’t Invest in Individual Stocks
When it comes to individual stocks, the great risk of your money is the greatest challenge. Individual stocks are so appealing but you might lose all your money when a company encounters a bad quarter or goes bankrupt.
Never Invest If You Don’t Understand
When you can’t make someone understand about what you are investing even if you try your best to explain it, then there’s no reason to invest in it.
Invest Pre-Tax and Tax Free Money First
Investing Pre-Tax money means that you’re investing in retirement account such as IRA, 401k, 403b. These accounts are not taxable as income, so investing here will reduce your income taxes for now. Nonetheless during your retirement days, you will be taxed on money that you will withdraw. Meanwhile, Investing Tax Free Money means investing in a Roth IRA or Roth 401k. Like regular income investing your dollars in these accounts will be taxed. The good thing is, during your retirement, the money you withdraw from these accounts is not taxable.
Invest 15% of Your Income
One great way to grow your wealth is taking a consistent investment of the 15% of your monthly income. You can save your money straight to your investment accounts through an automatic deduction of your income from your paycheck. This way of automatic deposit is definitely the most effective way to maintain saving and investment.
Stop Being Too Conservative
While taking too much risk is not good, being too conservative in your investment is even not beneficial. Example is keeping all your money in a money market account or Certificates of Deposit. Naturally these kinds of investments are safe but they only offer a very low in terms of return of investment. Yes, these investments are very safe, but they have a very low return on investment. Usually you’ll just end up losing your money with these mediocre investments overtime.
Here’s to helping you better understand what’s in your pocket.
Until next time.
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