Not too long ago we talked about how much is the right amount to start saving and setting savings goals. I was very vocal in sharing the fact that I think we can all afford to save AT LEAST 10% of our income, no matter what that income may be. If I can save 25% as a mother of five living in New York City so can you.
Saving is great, but just stacking cash isn’t helping your money grow over time. That’s where the magic of investing comes in. Don’t be afraid of what I’m about to tell you. It seems like every time we turn on the TV we hear about how poorly the stock market is performing and how Wall Street is losing money left and right, if you’re even paying attention to that stuff at all.
I’m not saying you need to invest every last dime you have into the stock market; but if you don’t want your savings to be worth the same amount in three years that they are today then you need to start investing.
Here are three tips to help you start investing your savings:
Start slowly, like in slow motion
One of the worst things you can do when starting to invest is jump in feet first. Take it nice and slow. Organize your money to invest a portion of your savings every month and get comfortable with how the value of your investments fluctuates with the market.
Buying an investment on the same day only buys at one price and what if that price is high? Not good. The whole idea of investing is to buy low and sell high – or just leave the money there for many years to come.
Research your options before buying
Knowing the level of risk with your investments is a key to finding the right investment for you. Start with a low risk mutual fund such as a fixed income or bond fund.
It’s a good place for beginners to start investing because it offers a potential higher rate of return than a cash savings account. It also doesn’t invest in anything too high risk (like gold or oil), so the losses will be minimal compared to other types of investments.
Talk to a professional, not your neighbor
It’s called personal finance for a reason, don’t take advice from your family, friends or neighbors because what’s good for them may not be (probably won’t be) good for you. Always talk to a professional and ask a ton of questions before making any investment decisions.
Feeling ok so far? Ready for more? Download our one sheet which includes the additional 9 steps you will need to get started in the stock market
Add this to the work of compound interest and you will exponentially grow your nest egg.