Sooner or later, everyone needs to build a nest egg; one that will take care of you when you are unable to care for yourself. Interestingly though, a lot of the younger generations – millennials especially – do not like to entertain the idea that we might have to retire one day and our income sources might be limited to what we have saved during our sunny days. Well, people and perceptions are not entirely to be blamed; demanding lifestyles and other generally increasing costs of education, having a family, owning a home and/or a car, all add up to this mindset. Nevertheless, remembering and making plans for the inevitable retirement is very important at any stage of life. According to the Motley Fool, 42% of American workers live paycheck to paycheck and 29% of all American workers have less than $1,000 in savings. To us here at InsuredMine, these statistics are concerning.
You can start saving and investing at any age; however, if you invest your savings wisely, you could amass even more wealth. Investing wisely does require some planning and knowledge. Here are some useful tips that can get you started on your investment journey!
Invest your nest egg in what you know
When you stick to the areas of your interest and expertise, you are more likely to spend time on research. Most of us have heard of Warrant Buffett – one of the most successful investors in the world. His simple advice to investors is, “If you don’t understand a business, don’t buy it.” The interesting thing about investment is that no matter what your interests are, it is possible to translate them into money. For instance, if you are interested in technology, you can research companies or start-ups in that field and invest in them. By choosing your investments accordingly, you are likely to make informed choices and leave little room for failure given your knowledge of the field.
If anything, lead; don’t follow
Avoid herd mentality and make independent and informed choices while investing. Remember, because your friends and/or family invest in a particular business, does not warrant you to follow suit. You should do your own research to decide whether the business is going to succeed in the long run.
When you are new to investing, seek advice from people that have already done so. Find someone that you trust will offer unbiased and useful investment advice to guide you. These people can include your parents, relatives and/or friends. Consider their advice, but decide for yourself. If you do not have any such contacts, you can seek advice from a professional financial investor, usually for an agreed-upon fee.
Diversify your risk
All investments carry a certain amount of risk. So before you invest, understand diversification. This knowledge will help you choose your options wisely and will minimize your risk. For instance, if you diversified your investments into four separate areas, even if one of the investments fail, considering the other three perform fairly well, might still save you from experiencing a complete loss of your investment.
Don’t fall for traps
Sadly, many people still fall for the elusive dream of getting rich quick. These ‘get rich quick’ schemes are shady plans that promise high rates of return for a small investment. These schemes seem genuine and profitable to the early investors, but as the supply of investors and money dwindle, they usually collapse. Ponzi schemes and Pyramid schemes work in a similar way. These schemes usually target a susceptible community through the leader of the group first and work their way into the members. Seek professional independent advice before you decide to invest in any schemes, and do not give in to peer pressure. We need to protect our money from scammers and schemes.
It is our own hard earned money. With a little planning, foresight, and friendly or professional help, everyone can make successful investments to build and safeguard their nest egg. Social Security income alone is not enough to support our quality of life after retirement. So it is time to do something about it and start saving as soon as you reasonably can.