When it comes to investing, time is your ally. This is why it is best to start young. Millennials have the advantage that the older generation regret missing out on. Do not make the same mistake. Have you been eyeing the majestic Brio Tower in Makati? Do you wish to travel the world someday? Are you looking to build your wealth and retire comfortably? Whatever it is that you covet, you can achieve it with determination and the right strategy. This is especially true for young professionals who have their whole life ahead of them. Here are investment hacks to help you out.
1. Devise a saving strategy
Before you can can invest successfully, you need to be great at handling your money first. You need to have savings. For this to happen, you will have to devise a saving strategy. People often use one of two formulas: Income – Savings = Expense or Income – Expense = Savings. Many find the former more effective as it lets you take control of the amount of savings you put aside. It also lets you reign in your expenses.
2.Automate your savings management system
Decide on a fixed amount of savings you’d like to set aside, then enroll in a money management program. Ask your bank for available options. Most banks offer a program that automatically transfers a portion of your salary to a savings account. This is especially helpful for people who are having difficulty keeping their expenses in check. As the old adage goes: “You must pay yourself first.” Usually it’s not how much you earn but how good you are in managing your money that determines whether you will have financial freedom or not. So make use of all the management tools available.
3. Set aside an emergency fund
Before you can succeed in investing, you need first to be debt-free. One of the reasons people fall into debt is when they are not prepared when dealt with a crisis. To avoid this, you must be ready with an emergency fund. It’s one of the first things you need to accomplish if you are to have a robust investment portfolio. One of the easiest ways to lose money is having to pay high interest rates. Ideally, your emergency fund should amount to six months’ worth of your living expenses. This way, even if you lose your job, you won’t have to rely on risky loans or touch your investments. And you’ll have time to look for a job you actually like and that pays well.
4. Use the power of compound interest
As a young professional, you have time working in your favor. Use it to your advantage. Starting young lets you reap the benefits of compound interest, or the accumulated interest you gain when you reinvest the earnings you get from your investments or savings. If you start dabbling in investments in your 20s, your money will have more time to grow. This will let you retire comfortably, maybe even sooner than most people!
5. Be willing to take risks
You can’t reap huge gains without takings risks. This is especially true for investing. Your youth gives you more leeway to take risks. You’ll have more time to recoup from losses and profit from the lessons of your mistakes. In the world of investing, higher risks mean higher rewards. The more you keep beating the odds, the more of an investing expert you’ll become. And you’ll have your portfolio to show for it.
6. Make sure you’re protected
Sometimes, people encounter life crises that are too heavy for an emergency fund to handle. For this, you have insurance options to turn to. One especially great option to try is the variable universal life (VUL) insurance. A combination of life /health insurance and equity investment, VULs let you hit two birds with one stone. Many established providers offer plans that will let you retire comfortably with millions worth of investment returns keeping you secure.
7. Buy blue chips
Many young professionals balk at the idea of investing in stocks because they find it daunting. They feel that learning the trade is hard, and dabbling in the stock market would require expertise. Investing in stocks does not have to be complicated, though. For starters, you can take the safe route and put your money in blue chips. Blue chips are shares from well-established companies. These companies have been operating for many years and are financially sound. Most are even familiar household names. Investing in blue chips lets you dump your money in companies that are not likely to go bust. So all you have to do is buy the stocks, and leave your money to grow on its own.
8. Invest in mutual funds
A mutual fund pools money from several investors. The fund is then invested in a carefully selected portfolio. Investing in mutual funds allows you to have a diversified investment managed by financial experts. There are several types of mutual funds, including Money Market Funds, Bond Funds, Balanced Funds and Equity Funds. Check your own risk appetite to see which option will work best for you. You can approach your bank for more information on this. They can also help you identify your risk tolerance and choose the right investment vehicle for you.
9.Add valuable real estate to your portfolio
Investing in real estate is one of the best things you can do for yourself. There’s nothing like the security of having your own home. When done right, real estate investments also make for a great cash cow. If, say, you invest in the DMCI Brio Tower condominium, you can know for sure that you can count on a monthly stream of income should you decide to lease it out. The property is, after all, located along EDSA. Tenants will snap it up in a jiffy! When it comes to real estate, your one asset remains to be good ole ‘Location, location, location’! Add in a well-structured property by a trusted developer and a secure condo community, and you have yourself a sure winner.
10. Dabble in forex trading
Forex is simply currency trading or foreign exchange. It is a decentralized global market where all the currencies in the world are traded. It is not only the most liquid but also the largest market in the world. With daily trading that exceeds $5 trillion, this is one market you would want to dip your toes into. Note that Forex is a high-risk investment vehicle and must be approached with caution.
Whether you want to experience condo living or just want to have the security of a sound portfolio, the right investment tactics can help you have your heart’s desires. Money can’t buy everything, but it would be great to experience the best that life has to offer.