|| 10 Important Investing Tips|
It has been said that one of the most powerful forces in the known universe is compound interest. There is no greater way to create substantial, lasting wealth than to earn compound interest, and there is no better way to earn compound interest than investing. This is why millions of Americans invest in retirement accounts each year. If you are just beginning to invest, or if you are a seasoned pro, here are a few tips to help you on the journey.
The more money you can save every year, the more wealth you are going to create. This is basic investing truth. If you want to create substantial wealth in relation to your income, spend as little money as possible. Then, take your extra cash flow each month and funnel it into your investments. The best way to create extra cash flow each month is to simply eliminate and pay off all debts. Then, instead of using that extra cash flow to increase your standard of living, direct that cash into investments. That is the way of true wealth creation.
Degree of Activity
You must decide on your degree of investing activity. Will you be a passive or active investor? A passive investor spreads risk out among mutual funds and may use an investment advisor. An active investor makes all of her own investing decisions and actively allocates cash to various diversified investment vehicles. Being an active investor is very risky and requires lots of study and discipline. You may also want to consider a hybrid. For example, you could allocate 75% of your money to an investment advisor, but you want to actively manage 25%.
Many next-door millionaires have accumulated wealth by working longer hours and investing that money. If you are paid hourly, consider working a few extra shifts each month and then saving all of that money. Or consider picking up an interesting and engaging side job, or creating a small part-time business that can increase your income. Then, direct that extra income to your investments.
The Long Haul
Always keep the big picture in mind. There will be tough times. You will experience recessions and difficult market conditions. Stay disciplined and keep the long-term horizon in view.
Find Your Niche
Warren Buffet never invested in tech stocks in the late 90ís because he didnít understand them. And he didnít lose very much money when the tech bubble burst. As an investor, it is important to invest in areas where you feel comfortable. Find industries and a niche where you have a degree of understanding, and learn all you can about it.
This is the best way to get a free education. Jump online and search for customer reviews of the best investing books. You will quickly find the classics, and any serious investor should have a small library of the classics.
Talk With Experienced Investors
Most experienced investors love what they do and are more than willing to share insights concerning the market, trading psychology, etc. If you have any family members, friends, or co-workers who are serious investors, approach them and ask if you can take them out to lunch or dinner to ask questions and gain some insight concerning the investing world. Most serious investors will be happy to help.
Write Out A Plan
Investing should be seen as one of the most serious projects you will ever engage in during your adult life. Make sure you have a detailed plan written out that explains how you will invest, how much you will invest, how you will handle drawdowns, etc.
Include Your Spouse
Even if you have separate bank accounts and separate financial lives, include your spouse in the investing journey. It is a great way to bond, and it will also help prevent any potential conflict when markets turn south. If you are both in the on the decisions, it will be much easier to bear the tough times down the road.
The Power of Compound Interest
Again, remember that the power of compound interest is incredible. You want to his power to work for you in every way possible. Do this by eliminating all bad debts, so that compound interest is never working against you, and direct as much cash as possible to your investments on a monthly basis, so that the power of compound interest is working for you, helping you reach all of your financial goals.
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