Don’t let your financial fears ruin your retirement , you can invest and make money for your old age. You can find safe investments and good money-making ideas if you know where to look. There are some simple principles you can follow year on year which will help you make the most of the money you have and stop you being conned into losing it. Here are 7 of the best ways to grow your money.
- Eradicate the debt
- Have a savings safety net
- Don’t put all your eggs in one basket.
- Keep putting money in regularly
- Keep yourself informed
- Invest in things that you understand
- Change your investments as you get older
Eradicate the debt
Debt is the devil when it comes to making money for yourself. It’s probably the single biggest barrier to wealth for most individuals. Before you even start saving, any non-mortgage debt needs to be paid off as quickly as possible. Credit card debt along with overdrafts and loans, particularly secured ones need to be paid off as a matter of urgency.
Have a savings safety net
You should try to have some cash set aside somewhere, which you could get your hands on, in case of any emergency. As a general rule, gurus always advise people to have three months of expenses set aside somewhere in case there’s trouble at work or you can’t work for a while. We like to say have five months of living expenses set aside, just in case. That means having enough stashed away in cash to cover your house payment, fuel expenses, homeowner’s / renter’s insurance, auto insurance, groceries, utilities, cell phone and internet expenses, and whatever else your core monthly expenses may include. This is the ONLY money we could see you possibly putting in a low-yield savings account. Period. And you don’t touch that money until you absolutely need to.
Don’t Put All Your Eggs in One Basket
To be safe you must spread your money across different asset classes (shares, property, cash, bonds and so on). Don’t put all your eggs in one basket. Nothing in investing is certain. No one has a crystal ball and no one can tell you what is going to happen in the future. No investment (not even houses) is as safe as houses. You cannot rely on any one asset class to create a nice pot of money from which you can receive a decent income later on.
Keep Putting Money In Regularly
In saving and investing, it’s a good idea to be regular! Even if you have only a small amount of money left over each month, in the long run it’s much better to set up a standing order from your bank account into an investment each month so that the money is put away before you even see it. You could even make the most of one of those savings accounts that gives a decent return if you’re willing and able to invest a certain amount of money every month.
Managing your money is like eating healthily. You don’t need to be a qualified nutritionist to know how to eat healthily but you do need to know basic facts about fruit and vegetables, vitamins, protein, minerals etc. to work out how to have a balanced and healthy diet.
It’s the same with managing your money. You don’t need to be a qualified financial adviser but you do need to have some basic knowledge about how money works.
So spend a little time each week reading the money pages in your weekend papers (they tend to have the most money articles). Learn a bit about saving and investing. If we spent as much time researching financial matters as we do researching the next flat-screen TV to buy or which new mobile we want we would all be a whole lot richer.
Invest in Products You Understand
As a general rule, you should only invest your money in things you understand. You should not invest in something merely because someone else is. You should invest only in what you understand clearly. But never be slow to learn. When it comes to your money, that’s not the time to get lazy about learning and hope for the best. If you understand real estate well, invest in that instead of stocks.
Change Your Investments as You Get Older
You can invest in risky things during your twenties, thirties and forties. But as you grow older, you should invest in less risky ventures. Also, when it comes to about five years before you plan to retire it is a good idea to ‘lifestyle’ your investments and start moving your money from the more volatile, ‘growth’ products (shares, property, commodities etc) to the more stable investments such as savings accounts and bonds.