Having an extra source of money is definitely a good way to deal with this financial nightmare however, finding a reliable source of extra income is also a bit of a challenge. If you consider investing as another way of adding income, always remember these five most important things to avoid regrets.
Rule #1. To make money you have to spend money.
Undeniably there is no such thing as "FREE" even for the very air we breath. General rule in business, if you want to generate profits you need to spend first. Being mindful of your expenses and spending appropriately when/where necessary is definitely the more balanced way to look at the early stage. Put another way– deciding to spend more money doesn't necessarily mean you're going to make more money. So be careful. Don't rush to spend as much as you can. Spend a little first, learn and regroup, spend better.
Rule #2. Know where to invest your money.
Investing is essential to good money management because it ensures both present and future financial security. Not only do you end up with more money in the bank, you end up with another income stream. Investing is the only way to achieve both growing wealth and passive income. However, scam artists read the headlines, too. Often, they’ll use a highly publicized news item to lure potential investors and make their “opportunity” sound more legitimate. If you have doubts, better ask questions and check out the answers with an unbiased source before you invest. Always take your time and talk to trusted friends and family members before investing.
Rule #3. Create and maintain an emergency fund.
Most smart investors put enough money in a savings product to cover an emergency, like sudden unemployment. Some make sure they have up to six months of their income in savings so that they know it will absolutely be there for them when they need it.
Rule #4. Realistic return of investment.
One of the main reasons new investors lose money is because they chase after unrealistic rates of return on their investments. That might sound harsh, but it's important that you understand: Anyone who promises returns like 30% - 100% within a very short period of time is taking advantage of your greed and lack of experience. Basing your financial foundation on bad assumptions means you will either do something irresponsible by overreaching in risky assets or arrive at your retirement with far less money than you anticipated. Neither is a good outcome, so keep your return assumptions conservative and you should have a much less stressful investing experience.
Rule #5. Evaluate your comfort zone in taking on risk.
All investments involve some degree of risk. The reward for taking on risk is the potential for a greater investment return. If you have a financial goal with a long time horizon, you are likely to make more money by carefully investing in asset categories with greater risk, like stocks or bonds, rather than restricting your investments to assets with less risk, like cash equivalents. On the other hand, investing solely in cash investments may be appropriate for short-term financial goals. The principal concern for individuals investing in cash equivalents is inflation risk, which is the risk that inflation will outpace and erode returns over time.
What About the 'Great Return' Stories?
What about the stories you hear about people earning spectacular returns by finding the right product to put money in? That’s called luck. Some people win the lottery too, and we’re happy for them, but we don’t go around investing all our money in lottery tickets, do we?
It is absurd that just because one person may have made a good return on a food or beauty product, that you would think it is easy to duplicate the results. It’s about as easy as winning the lottery. Never follow the fads.
Please feel free to share your idea on the comment section. Your opinion matter the most and is one of a million grace for more financial growth and development towards the author and readers.
"Only invest what you can afford to lose."
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