If you are keen on getting an understanding on personal investment, it’s essential to use a number of tools that will help you make this process much easier.
What is investment?
Investing, on the other hand generally involves buying an asset which you believe in the long-term will yield a high-return. It forms part of your financial plan to build wealth.
When you are considering investment, it’s important to keep in mind that you need to have an investment goal. This is also a reason why it is generally harder to get access to the cash.
Higher returns are brought about by compound interest and it always involves risk. The more risk you are prepared to take, the higher the potential to earn higher returns. An investor can anticipate making a profit due to advanced research and prudent selection of an appropriate investment vehicle.
The key to investing is to start as early as possible. You can then on work on figuring out which types of assets you want to own.
You also need to make that you have an emergency savings account.
Investing in stocks means that you own an equity in a business and you are entitled to a share of the profit of losses generated by that company’s operating activity.
You have other options, such as investing in fixed-income securities and investing in real estate.
There are various ways through which you can earn returns, such as:
- Dividends (shares)
- Rent (from properties)
- Interest (from fixed interest securities)
Keep in mind that there is no such thing as a “no risk” investment when it comes to personal investment.
It’s important to spread your risk by putting your money into a number of different products and asset classes.
If you want to see your money grow over the long term, investing is the way to go.
The right investments for you will depend on how happy you are with taking risks.
Aim to invest at least 10% of your income.
