Basic Investing Strategies – How to Invest
Learning how to invest your money is one of the most important lessons in life. You don’t need to be college educated to start investing, in fact, you don’t even need to be a high school graduate. You just need to have a basic understanding of business and have the confidence to make a plan — consider it a business plan for your life. You can do it.
Why Investing Can Be Scary
For many of us, money and investments weren’t discussed at home. These subjects may even be taboo within certain households — quite possibly, in households that don’t have much money or investments.
If your parents or loved-ones aren’t financially independent, they probably can’t give you good financial advice (despite their best intentions). And even if your family is well-off, there’s no guarantee that their financial advice makes sense for you. Plenty of parents encouraged their kids to buy a house during the peak of the housing bubble, because in their lifetimes, housing only went up.
Having said all of this, the first investment that you make will probably be the hardest.
The Goal of Investing
Of course, everyone has different financial goals — and the more you learn, the more confident you’ll be in determining your own path. But here’s a basic financial goal to strive toward:
“Over decades of hard work, I would like to make more money than I spend and invest the difference. By the time I retire, I would like my investments to throw off enough cash — through dividends or interest — that I can live on this income without having to sell my investments.”
Notice the first part of this goal is about hard work. If you’re hoping to take a little bit of money and gamble it into a fortune in the stock market, you can stop reading now, this article isn’t written for you. But if you plan to work for a few decades, and want to make sure that you don’t have to work until life’s end, you’ll need to spend less than you make and invest the difference.
Also, you’ll notice that this goal doesn’t recommend selling your investments. Rich people don’t sell-off their assets for spending money — if they did, they wouldn’t be rich for long. They stay rich because their assets provide enough cash flow to support their lifestyle. And these cash-producing assets, through careful estate planning, can be passed down from generation to generation.
Enjoying your twilight years by living off your investment income — and having something left over for your loved ones or a charitable organization — is something that all investors should aspire to. It may not be possible for everyone, but it’s the right attitude.
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