10 Simple Rules to Invest Your Money Properly
You must fully understand the difference between how you invest and how you save before you can embark on your journey to wealth and financial independence.
It is about finding the right balance between the process of knowing how to invest and the process of saving.
Both are closely related, but independent.
One cannot in any way be confused with the other: an investor can own a dozen rental apartments and still be unable to pay his bills if he has not been able to balance his efforts between, on the one hand, how to invest and, on the other, how to save.
How to Invest in 10 Basics
There is a big difference between making money and being rich.
Wealth is the accumulation of assets such as real estate, investment accounts, and retirement accounts.
Building wealth requires a strategic plan to save, invest and grow your wealth over time.
When I help my friends and family invest their money, I always remind them of the big rules that are important for success.
These rules are more important than derivative calculus, the theory of integrals, or Euclid's theorem.
Learn them, and more importantly, use them to reduce risk and empower your precious money to work for you for years to come.
These are the most important rules you need to know about how to invest and they will help you build your wealth.
1. Pay yourself first
Your most important asset is yourself. You are the person who makes your money. And you are responsible yourself first.
Make it easier for you: have your savings automatically deducted from your income and invest it in your investment accounts.
Your investment accounts are different from your savings accounts. Your savings are kept in a passbook and are easily accessible in the event of an emergency or major purchases.
In addition, savings accounts should indicate what you will have to live on for six to 12 months if your source of income disappears because you lose your job, become incapacitated or perhaps have to care for a loved one.
Your investment accounts - for your pension - are long-term.
2. Think long term
Wealth, while sometimes achieved through luck (but this is a minor exception), is usually associated with consistent investment over time.
These investments often include savings, investment accounts, certainly your home (you can't get rich renting your home), and perhaps some real estate or real estate.
3. Live below your means
You don't have to spend everything you earn. Just because you have money in your account after you've paid all your bills doesn't mean you have to spend it all.
These funds should be properly allocated in your savings and investment accounts.
And that doesn't mean you can't have fun or share great experiences with family and friends.
It just means that you need to take the time to think about what you really need and plan for it.
4. Make consistent investments
Knowing how to invest consistently instead of putting your money in a savings account can help your money grow in the stock market.
By investing constantly, you can also buy stocks when they are cheapest: when the market is falling. A consistent investment of just $200 a month can make you a millionaire by the time you retire.
5. Learn to invest
Get a good education to learn how to invest. You will learn to devise a strategy that supports you and with which you can achieve your life goals.
You will turn your income into wealth by identifying goals that support what is important to you.
Your training will give you ideas you never thought of or help you through a difficult time. There's no reason not to. This is especially true for women.
Because of our poor culture and education in this field, women may not be comfortable with financial terminology and how all financial instruments work. That is why it is important to find the right training. When this is done, it turns out that women are generally better investors than men.
Not surprisingly, half of my training clients are women who also want to learn how to invest.
6. Don't get carried away
At any point in history, there is an asset class that is starting to become overvalued.
Respect the balance you have chosen between your goods and do not let yourself participate in fleeting bubbles that will burst in your face. Keep your faith. Stick to your obligations.
Of course you have to take risks or there will be no profit and you will become poor instead of rich, but you have to be able to stay calm, knowing what you own, why you own it and how, if any. I'll be fine.
7. Diversify Your Asset Classes
Each asset class has its own pros and cons that you should be aware of.
Finally, real estate provides more cash flow than other assets (through monthly rents), but it generally doesn't increase in value like a good stock portfolio does, is inherently less liquid and generally requires borrowing.
Stocks are unmatched when it comes to increasing their value over the long term and protecting against inflation, but they can fluctuate wildly in the short term, sometimes by more than 50%.
Bonds, on the other hand, provide more short-term stability, but can cause you to lose purchasing power if inflation rises.
Ideally, it will be necessary to invest in a balanced way in the 3 categories, and this in accordance with the trends of the time.
8. Keep operating costs low so you can invest more capital
Every cent you pay in commissions, brokerage and the like eats into your wealth enormously.
A percentage here and a percentage there doesn't sound like much, but because of the unparalleled power of compound interest, it could cost you thousands of dollars in the future.
It's money that the middlemen profit from, not your family.
This real tragedy can be avoided by learning to invest, and preferably by working yourself, and when it comes to financial investments, by favoring good online brokers.
9. Never buy something you couldn't explain to a small child
If you can't explain how to invest in an asset that will make you money in 3 concise sentences that even a small child can understand, don't invest in it.
Life is full of uncertainties, but they can be controlled to a certain extent.
If these uncertainties are beyond your understanding, don't risk your family's future.
Of course you miss some opportunities. But you won't get ripped in the face either.
This is why so many unlucky people are being scammed by these speculators who run these scam sites that claim to have found a way to win in the stock market every time.
You can easily recognize them by the terms they use such as 'trader', 'trading', 'forex' etc. If you participate, these sites will make money, not you.
10. If you chose them well, your investments are made to last.
Don't be like those poor daredevils who don't know how to invest and keep buying and selling all the time.
You work with time like a friend.
If only because your returns will be diminished each time by the commissions, fees and taxes you have to pay for each trade, taking you out of the full power of compound interest.
If you follow these 10 tips, you will be successful.
You can adapt this strategy to your situation and individual preferences.
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