The following post is a guest contribution. If you would like to write for My Money Design, please feel free to contact me.
Investing money has never been exclusive to only the super wealthy. These days anyone with Internet access and a little bit of capital can open a low cost account and start putting the power of compound returns to work for themselves. Even if you only have as little as an extra $100 extra each month, you can choose to put it away into stocks and mutual funds that will potentially grow into a stream of passive income years later.
If there’s one thing you can do to secure your future, you need to become familiar with the financial planning process. Once you have a solid footing in the basics, only then are you ready to take a leap of faith and start investing your money. Here are some steps to get you on the right path.
Go Over Your Financial Planning Process Goals:
The kind of investment that you choose will depend on your goals. If you want to have a potentially higher return, you will want to invest in higher risk stocks. However, if your goal is to just have a stable increase in your holdings without risking much, you will have to plan on a much lower rate of return over a longer period of time. Generally though, it’s best to diversify. Choose from a variety of options to maximize your financial planning opportunities, but always keep your goals in mind.
Establish An Automatic Withdrawal:
The easiest and most painful way to save money is to pretend like you never had it at all! You can accomplish this by setting up your savings accounts to pull automatic withdrawals every month. Many people already do this when their 401k contribution gets deferred from their pay-check every two weeks. But you could also use this same strategy to:
- Deposit money into your Roth IRA
- Transfer money into your brokerage account for stock or mutual fund purchases
- Redirect the money into a savings account to build up your emergency fund
Always Read the Fine Print:
You must make sure that you check all of the fine print on investments that you make. You might consider using a service or purchasing the shares with some businesses directly, but you must always do your research. Otherwise, you might wind up with more fees than you anticipated. In some cases, the investment program may charge a set fee per transaction, or they may charge a percentage. Be sure that you understand this.
Keep Your Financial House In Order:
Keeping your financial house in order is one of the easiest (and essential) parts of the financial process to make sure you have adequate money to set aside each month for investments. The best place to start is to make sure you are not in any kind of financial trouble or in danger from identity theft. Regularly checking your free credit scores will help ensure that everything is fine and that your rating qualifies to receive the best possible interest rates.
Investing is an important part of the financial planning process when you want to secure your chances for wealth in the future. However always remember that staying on top of your finances is an ongoing process. Even though it is great to understand the fundamentals of money, you have to always be challenging yourself to do better. Strive to actually produce results by following through on those good financial habits you’re working on achieving.
Images courtesy of FreeDigitalPhotos.net