Any of your savings must bring additional income, do not leave them just lying in the bank account or at home. Hence, if you have any free money, be sure to invest it to receive returns. Don’t you know where and how to start? No problem, our team has prepared a step-by-step guide for you.
In lay terms, investing is putting money into some asset (real estate, stock, crypto) in order to achieve additional income. For example, you can buy the stocks of some aspiring company and hold them. As this company grows and develops, the value of its stocks will increase as well. As a result, you will be able to sell them at a higher price and achieve an income. Meanwhile, in practice, this income will be passive as you will not need to make any effort to earn it.
Now, let us give you exact guidelines on how to start investing:
- Decide what you need it for. Your end goal will serve as a source of inspiration and motivation. It will not let you give in to difficulties. For example, you may dream of buying a new house, paying for your kids’ education, abandoning your full-time job in 10 years, or living from passive interests only till the end of your life.
- Get your finances under control. Get rid of debts, calculate how much money you need to cover all your family’s needs, and find out how much free money is left in the end.
- Determine how much you want (and can afford) to invest. There is no universal recommendation on how much you must invest every month. Expert tips vary from 10% to 30%. Choose an optimal percentage based on your personal earnings and needs.
- Register an account. There are two basic approaches to choose between. First, you can go to a bank and create a savings account, like IRA, 401k, college savings account, etc. Or you can opt for a more flexible solution ― a brokerage account. In the second case, you can turn to Interactive Brokers, Charles Schwab, eOption, or another broker that is licensed in your country. The procedure itself is pretty simple. You need to go to the website selected and fill in a sign-up form like on any other online source. But you may also be demanded to provide a copy of your ID for verification.
- Make your first investment. The earlier you begin, the more money you manage to earn.
In sum, investing is not just a source of additional earnings, it is an effective instrument for achieving financial independence and stability. So, it would be wise to take full advantage of it.