When is really the right time to know if you are ready to start investing? Is there a specific age for you to start? Well, there is no really an exact time, date, and age for you to invest but the only question is “are you ready?”
Most people think that in you’re early 20’s, you should start investing at that very young age. Yes, it can be. However, identifying first all the necessary information about investing is definitely a must! It is not just about money that you need to have and consider whenever you think of investing thus, investing possess multiple aspects that young people should know and understand.
Although there is no rule in investing, you just need to be knowledgeable enough in your new business venture that you are going to take in which is the world of investing. Even if you have the means or the money, try first to understand and study the type of investment that you are going to have. You would not want to lose money or put your money to waste, so it is really necessary for you to study about investing in order for you to create more money.
At what age should you start investing? Does investing early is the best decision to create wealth and assets? Like what I’ve said, there is no really a specific age to start, you just need to have enough confidence, knowledge, resources, investment goal that you wanted to achieve in the future and setting personal finance to make ends meet.
Identifying the pros and cons of investment is key in order for you not be surprised for the factors and results that you will be getting. As investment possess greater risk, but more risk means high reward. You must be wise on your investment decisions that you will make because it will reflect on your investment goals.
Before embarking to the journey of investment, let us first define what is investment, learn the types of investment, and the things to consider whenever you will be investing. Through that, you will be able to identify if you are really ready to start investing.
What is investment?
An investment is an asset or item acquired with the goal of generating income or appreciation. Appreciation refers to an increase in value of an asset or overtime. Investment always concerns the outlay of some resource today such as time, effort, or an asset in hopes of a greater payoff in the future than what was originally put in. Investment meaning is primarily to obtain an additional source of income or gain profit from the investment over a specific period of time.
An investment involves putting capital to use today in order to increase its value over time. It involves to any medium or mechanism used for generating future income, including bonds, stocks, real estate property, or alternative investment. Remember, investment do not guarantee of appreciation, it is possible to end up with less money than with what you started.
Types of investment
Stocks
Stocks is an ownership or shares in a company. By investing in stocks, you’re buying a share or portion of the company’s earnings and assets. This is a way for businesses to raise money and a way to earn from their earnings.
However, stocks can be risky. The returns and losses of your investment mostly depend on the company’s performance. If the company does well, the value of stocks in the stock market increases and vice versa. Stock value can also be affected by political and market events. And as a wise investor, you can diversify your investments and buy stocks from different companies. It also helps if you keep your individual stocks around for longer periods of time. Many stocks produce higher returns over time.
Bonds
A bond is an investment where you lend money to a company, government, and other types of organization. In return, the bond issuer pays you interest for the borrowed money, and, at the same time, repay you the original amount you paid for the bond (principal).
Borrowers issue bonds to raise money for investors willing to lend money for a certain amount of time. When you buy a bond, you are lending to the issuer, which may be a government, municipality, or corporation. In return, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal, also known as face value or par value of the bond, when it “matures,” or comes due after a set period of time.
Mutual funds
Mutual funds diversify your investments by pooling your funds with those of other investors. Instead of making your own purchases, you hire a fund manager to handle all of your investments. Your money will be invested in stocks, bonds, and other assets. A mutual fund is a type of investment program that is funded by shareholders and managed by a professional fund manager.
Mutual funds provide good returns, prospects, and competent management. One sort of this fund is index funds, which are long-term investment vehicles that allow you to diversify your money among domestic stocks. The risk, on the other hand, is determined by the investments inside a fund. The higher the value of an index fund investment, the higher the fund value, which can be sold for a profit.
Property
Housing, real estate, raw land, and other rental properties are all types of proeprty. This form of investment is a to many people since it is tangible, which means that most brokers and investors can see, feel, and touch it.
However, property investment is fraught with danger. For starters, you could not get your money’s worth. This happens when the value of a property falls. It will be tough to sell then, leaving your money hanging because you cannot physically obtain it. Second, interest rates can rise, leaving you with high interest debt and never-ending payments unless you have a fixed mortgage. Finally, even if there is no profit, property investment is liable to property taxes.
Money Market Funds
Money market funds, which are not to be confused with traditional savings accounts, allow investors to leave a specific sum in a bank for a set period of time. You get your principal back at the end, but at a somewhat higher compound interest rate. The time period granted ranges from three months to a year. Although you can issue checks from money market funds, doing so reduces the value of your investment.
A money market fund is a type of mutual fund that invests in short-term, highly liquid assets. These instruments include cash, cash equivalent securities, and short-term debt-based assets having a high credit rating.
Retirement Plans
People invest primarily to ensure their future, which includes time after they retire. Retirement plans typically offer tax advantages as well as possibilities to grow savings over time. One example of a retirement savings scheme is our government’s Personal Equity and Retirement Account (PERA). This is entirely optional and can be obtained through banks.
You can save for your future by having these retirement plans or retirement accounts. After years of working nonstop, you will be able to have retirement savings that you can use in the long term. Begin designing your retirement plan to attain your retirement goals.
Life insurance with a cash value is called variable universal life. It is a kind of permanent life insurance that enables the investing of cash value through an integrated saving feature. Additionally, the premium is variable, exactly like with conventional universal insurance.
The return on the cash component is, however, low cost and not yearly assured as a result. Keep in mind that a good VUL insurance plan combines investment with protection, giving you the best of both worlds.
What comes next?
After knowing and identifying those types of investment, what long term investments do you have in mind? Are you ready to start investing? Have you decided which type of investment you are going to take in? Or are you still undecided? As someone who is new in the world of investment, building wealth does not happen instantaneously in which it requires a lot of time, money invested, and effort to make your money grow.
You will be needing a trusted financial advisor, certified financial planner, and a lot of investment advice from various people who are knowledgeable and into this business in a long time in order to achieve financial success.
Seek first to learn everything into this business and by learning, you can choose from different investment options that you think will suit to your financial goals. And everything starts by creating an investment account then everything will follow once that you have fully decided that you are ready to take on to this new financial adventure of your life.
Things to consider before investing early
You may begin investing as early as possible, at the age of 18 you can definitely start. By investing early it allows you to take more risks and have an opportunity to earn better in returns since you can discover and learn a lot from your wrong decisions in the start without affecting the long term financial goals.
First thing that you will do as a newbie in this business is to create investment portfolio which is a set of financial asset owned by an investor that includes bonds, stocks, currencies, cash, cash equivalents, and commodities.
Second, formulate investment strategy that will help you to achieve your financial and investment goals. This refers to the ways on how to keep up with this business wherein it guides an investor’s decision based on his goals, and risk tolerance future needs for capital. Next is you should have the investing efforts to help your investments grow with the demands of new investors and the market of today, you should be able to keep up.
Fourth, research the market. It is critical to do your own research into the market wherein several factors may have an impact on your investments so that you can make informed decisions. Understanding what is happening to the local, global, and domestic market is key as it will have a direct effect on your investments. This include things such as growth, unemployment rates, interest rates and inflation and even political events.
Fifth is time. Investing early gives means having more time to invest and to study the global market. This is the advantage of the young people who invest early which they can do so much because they have the time to do it. For example, they can do time horizon which they hold an investment for the longest of time until they need the money back.
And lastly, you should have the money, resources, and the capital to start investing because it is the main ingredient for every investors that started investing.
When you all possess those things and just have what it takes, then you are now ready to embark on your investing journey to earn more and extra money for your future. Just be ready of what comes ahead and enjoy earning.
Are you READY?
With all of the things mentioned and discussed above, does that makes you ready? The only person that can really tell if you are ready is you because if there is someone who knows your capabilities and what you can do is solely yourself. What I have just said are the things that you should know and some tips.
And if you are really ready to start investing, you may want to invest to properties which is a very good start for you. For example, you can acquire new condominium unit as your investment property as it holds greater potentials and earnings in the long run. You might want to consider Asterra as your condo provider because they offer you a good condominium units that is new, fresh, and suited for your needs. It is an affordable condominium that is specially built for you. By having this property allows you to thrive, grow bonds, and build a future for yourself. For more information, you can visit Asterra.com.ph for your investment goals.
Remember, an investment in knowledge pays the best interest – Benjamin Franklin
