Making your money work for you is in the essence of this thing we call capitalism. It also works if you’re not fond of that word, too – some platforms let individuals make small investments, and there’s also such a thing as ethical investing where you support the businesses that represent your values.
Since there’s no denying that money is what makes the world go around and things happen, it’s only natural that you’ll want yours to multiply without increasing your daily workload. That’s where investing comes in handy, and that’s what we’ll discuss here – how to start investing money.
Find Out How Much You Want to Invest
Before you do anything, you’ll want to know how much money you’ll have at your disposal to make investments. If you have a job, you can set aside a small amount of your salary every month and put it in an investment fund. If you have a law practice, for example, you can ask the bookkeeper you found at Big Law Investor to calculate how much money you can spare for investment.
Either way, you should first make sure you have something to invest before you make any actual move. You’ll have to do some planning at the start, but not too much – just enough to figure out how much and where. Why? Because…
You Want to Start Investing Early
Just like your pension fund – which is also a type of investment – the longer you do it the more money you’ll end up having eventually. The more time you spend on the market the more likely it is that you’ll lose your investment, but that’s something you should learn to live with.
The truth is that there’s no such thing as a risk-free investment. Even the traditionally safest investments – government-issued bonds – have a chance of failing if the government defaults on its debt. That happens all over the world. So if the game is like that either way, why not get into it as early as possible.
Pick the Account
Why do you want to invest money? It’s to have more of it available sometimes later, but why? Do you want to make sure you have a nice little nest egg to retire on? Or are you looking for something immediate, something more exciting but with potentially higher rewards?
Depending on the reason you want to invest, you’ll also want to open different investment accounts. A 401(k) or a Roth IRA are retirement accounts, and they operate under set rules that make them work for you the best if you use them to invest money you’ll take out of the account once you retire.
On the other hand, if you want to be free to invest and take out your money any time you want, with no penalty, you can always open a brokerage account. It will give you all the freedom you need.
Choose Your Investments
You’ll have to dig a bit deeper for information on this than a couple of lines in an article, but here’s the gist. There are several financial instruments you can invest in, and they all have different kinds of risks and rewards.
You can invest in a stock, for example, and take part in the ownership of a company. You can also invest in bonds, effectively lending the money to an entity that issued the bond. Then, there are mutual funds, which are a mashup of different types of investments, and the exchange-traded funds, which are like mutual funds that get traded like stocks. There are also more complicated ways to invest and you’re free to look into those too. For starters, however, these might suffice.