It’s a huge mistake many people make that investing and money building is something that only rich people do. You don’t have to be wealthy at all to make investments. There are so many options available that it’s possible for anybody to learn how to invest money wisely. It all starts out with a small amount of extra money. You don’t have to play the stock market or even buy into any company. You can simply start a CD account, money market account, or even savings account at a bank.
Let that be the #1 tip on smart investing: start doing it as soon as you start having extra money that you can spare. The younger you are, the longer you can wait for the money to wait for the interest to build. If you’re investing in stocks, the more time you have to wait for the market to move in a direction that is favorable to you.
Another smart, essential thing to do is to build savings for emergencies and short-term goals. Choose an online bank that offers a high APY and create either a savings builder account or buy a CD for 6 months – 2 years. Why keep cash hidden around your house for emergencies when you can keep it in an account that will accumulate some interest. Even if it’s only $500, you’ll still end up with more money than when you started.
How to Invest Money Wisely Away from Banks
If you do decide to go with the CD option, just make sure you keep the money in there for the amount of time agreed upon so that you won’t get charged a penalty fee for an early withdrawal. If there is an emergency, most banks will allow you to write a certain number of checks per month (usually around 6) or make online payments (up to 6).
Are you interested in how to invest money wisely when it comes to stocks? It depends on age – you must base those investments based on your horizon, and your horizon is the amount of time you need to keep your portfolio before you start spending it. A general rule of thumb is to subtract your current age from 100, and then use that number as the percentage of stocks to own in your retirement portfolio. If you’re 35, then your investment portfolio should have around 65% stocks.
Of course, stocks aren’t for everybody. There are other investment options, such as real estate and foreign currency trading. To really learn more about how to invest money wisely, it’s good to have the right tools and resources at your disposal. Motley Fool is a leader in investment picks and education. Sign up today to get the latest stock recommendations, “starter stocks”, community and investing resources, and more.