The basis for long-term prosperity is the right investment and competent money saving. But what is the right investment? Correct means any that returns more than what is invested in it. For example, if you bought stock at a price of $ 1000, and sold at $ 2000.
But not only financial investments are right. If you acquire an important skill with a paid online course that saves time, money and moral and psychological resources, this is also a reasonable investment. When you spend money to buy your own apartment or house, so as not to rent – this is a great investment for the long term. In this case, even buying a mortgage can be a competent investment.
If you want to invest profitably, start by specifying your own goals. Any investment that brings them closer will be right. Here are four options that are almost never a bad investment..
1. Financial airbag
It is impossible to predict events and predict emergency incidents with an absolute guarantee. We can say for sure that any person at least once in his life was faced with unforeseen circumstances. Sometimes they are modest – for example, emergency tooth treatment, and sometimes catastrophic – for example, loss of a job. Therefore, the creation of a personal emergency fund is a guarantee of well-being and lack of debt.
Most financial advisers advise collecting a financial airbag from an amount that is 3-6 times your monthly expenses. This will allow in any circumstances to focus on solving problems and correct the situation..
It is not necessary to store money in cash and watch how it gradually depreciates. Make a bank deposit with good interest and the possibility of withdrawal. So, prudence and rationality will help to earn.
2. Investing in yourself
Self-improvement is always the right investment. Regardless of whether we are talking about learning academic or technical skills, or about how to learn how to cook, repair appliances, or assemble furniture. It will save time, money and effort..
The greatest return on investment is provided by the “pumping” of abilities associated with professional activities. Firstly, it makes us more competitive and gives us the opportunity to demand better salaries. Secondly, high qualifications reduce the chances of being squeezed out of the labor market due to the widespread automation and implementation of information systems. Make yourself indispensable. It will pay off.
3. Investing in a family
If you have a family, you need to think about it being protected from unforeseen circumstances. Life insurance, disability insurance, home insurance – all this gives a guarantee that in case of incidents in the family, its members will not be in a disastrous situation.
Banks have ILI programs – an extended service that allows you to potentially increase funds and insure life. The insurer, during the validity of the concluded contract, invests your money in stocks, bonds and other exchange assets. In addition, the life of the investor is insured for the entire duration of the policy. In more detail about what IJL and how it works we wrote here.
4. Diversification of the investment portfolio
If you invest in classic stock market instruments, then it will not be superfluous to tackle the issue of diversification. One of the first principles of smart investment that needs to be learned is that you cannot put all your eggs in one basket. Include stocks, bonds, mutual funds and index funds in the portfolio. Everything that can make it more stable and assets independent of each other.
Examine the briefcase. Perhaps his balance is biased in favor of one type of asset. Consider other classes of financial instruments: from government or corporate bonds to shares of public companies (including from foreign exchanges) or precious metals. The goal of diversification is to reduce the risks associated with possible failures of certain classes or industries..
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What are some investment options that have a guaranteed return on investment?