Everyone wants to achieve financial independence—that is to be free from the chronic and daily woes of having not enough money. While you can earn money by going to your 8 to 5 job day in and day out, some individuals choose to play it smart and invest. The great thing about investing is that instead of making you put in the work, your money does it for you. But before you make a nosedive for investing simply because it promises the possibility of money in the future, you first need to find out exactly what it is you want to get out of it.
What is your goal in investing?
You may have heard of miracle stories involving ordinary people suddenly making it big just because of a simple investment move. To be perfectly honest, you may not be able to quit your job months, or even years, after you start investing. Unless you decide to make investing your primary source of your bread and butter, you will have to carry on with your job and invest only on the side.
However, the best reason for you to invest your money is so that you’ll gain financial independence even during your twilight years. This means that you can live comfortably even after you retire without worrying about how you will be able to manage your finances. This may dampen your spirits a bit considering that there has been so many stories of individuals who invest with their yachts and their life in the lap of luxury, But then again, only a handful of individuals, and they often devote their entire lives to the ins and outs of the investment world, manage to land with such a fortune. The wisest goal in your case is to have your investments earn enough for you to live off during your retirement and even after you’ve joined the great majority.
What are the two investing strategies that you should be looking into?
1. Mutual Funds
A mutual fund is a type of investment vehicle wherein funds are collected from numerous investors and are managed and invested by money managers into different securities including bonds and stocks. The portfolio of the mutual fund would be structured according to the investment objectives of those who contributed to the fund. One advantage of going with mutual funds is that even though you only have a small amount of capital to invest, you can still gain access to the diversified portfolios which would otherwise be difficult for you to buy into if not for the mutual fund. Of course, it’s crucial that you pick out high-quality fund providers.
2. Buying and Holding Stocks
If you want to have a more hands-on approach to investing, then why not try Warren Buffet’s way of doing things. Stock picking may give you are a more psychological satisfaction of purchasing a stock that increases in value, but if you purchase stocks of reputable companies and then hold on to your purchase for years, you’ll have a more valuable asset on your hands in the form of your portfolio. You may add Nick Scali on twitter when he mentioned that when your stocks start gaining dividends, you’ll can reinvest that amount and see the number of your stocks grow.
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Carl Farell is a registered financial planner by profession. He also loves to write about finance and a regular contributor to investment blogs that cover wide array of personal finance topics such as mutual funds, stocks, insurances and savings.