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In addition to your 9 to 5 job or running your
own business, you also need a hobby, which can
take a bit of your savings, nurture it and
return it back to you in the form of a
retirement fund. It should be like putting an
egg in a basket and finding a whole poultry farm
after a certain period of time. If followed
correctly, investing can make your money grow
and make your bank account glow by the time you
are ready to retire.
The right time to start: Anytime is the right
time, provided you have a small amount to
invest. It could be as low as 100 dollars. You
can also invest more, but keep an upper limit of
investments. Once you start investing, you might
start earning some profits and these can be
re-invested back. When you start receiving big
amounts from your investments, you can start
removing that amount from that investment cycle
and invest that money somewhere else or spend it
on any pending expenditure such as your child’s
higher education or a marriage in the family.
Once you start investing, you will have to keep
an eye on the path your money takes. If you are
investing in Fixed Deposits in your Bank, then
all you need to know is its maturity date and
the amount you will be getting back, but in the
case of shares and mutual funds, you will need
to track it almost daily. Set aside some time
from your day’s work to keep track of these
investments. Make a chart, even an excel
worksheet will do, mentioning your investments,
the purchase value, the current value, and the
maturity date if any. This chart will give you
an instant idea of your investment position.
The right place to invest: If you are a novice
in investing, take the help of a friend or use
the services of a broker to invest. The safest
investment with almost the least returns is your
Fixed Deposit in the Bank. Keep some amount in
fixed deposits to help you out in case of any
emergency. Link this amount to your savings
account so that you can withdraw money from any
ATM in case of an emergency like hospitalization
or burglary on a weekend. If you want to earn a
little more without major risks, then you can
invest in mutual funds. These mutual funds also
come in high, medium and low risk options where
the companies invest in the stocks of various
companies and share the profits made by them
with you. Invest in proven blue chip companies
where the risk is low to medium. This will
ensure that your money grows slowly and
steadily. Once you get the hang of it, you can
try investing in high risk and high return
mutual funds. Or if you want to earn more money
in a short time, then you can invest in stocks.
This will require more skills and even luck, if
you are to earn more money out of dealing in
stocks.
The trick
in investing in stocks is to buy when the prices
are low and to sell when the prices are high.
There is no right or wrong time to invest in
stocks, and the key is not to be greedy but to
sell out when the market is higher than your
purchase price. Earning lesser margins, but
rotating your money faster is the key to earning
quite a lot of money in stocks. However, start
with small deals and then proceed towards bigger
deals. Also do not invest in only one company,
however reliable your tip or your gut feeling
is. Invest in different companies in different
fields like engineering, software, etc so that
in case of any slump in one field or sector, you
still have other stocks to cover up your loss.
Follow the saying ‘Do not put all your eggs in
one Basket’. Invest some amount into Fixed
Deposits, some into Mutual Funds and the rest
into stocks. If you have gained quite a lot of
experience, you can then think about investing
in Commodities Trading, which is somewhat
similar to trading in stocks, the only
difference being that instead of buying and
selling stocks, you would be buying and selling
commodities like wheat, corn or even crude oil.
Such dealings, especially in very volatile items
like crude oil and steel have turned many people
into millionaires. However, do not enter this
market without knowledge or help.
The right place to start: You can buy many
investment self-help books and magazines from
any bookstore, visit
www.businessbookguide.com for
recommendations on the best investing books
available. If you do not have any accounting
knowledge, then attending a short course or
workshop is essential to at least make you
familiar with terms such as equity, debt, etc.
There are many self-help sites on the Internet
such as
www.InvestorsDailyEdge.com,
which gives you advice on investing and also
sends you free updates to your email address.
You can also hire a broker to help you out and
you can contact your tax consultant to study the
ramifications of your profits from your
investments. Your consultant will guide you in
ways to save your taxes from the profits, which
you may earn from your investments. You could
also turn another hobby into an investment. For
example, if you are interested in art, then you
could invest in a painting or antique artifact
and sell it off for a profit. However, the same
principle applies here, too. Start small, get
the hang of the art market and then think about
going big. In any investment, be prepared to
lose out in some deals. Keep an eye on the big
picture. Your aim is to make money in the long
run and losing out on some deals should only
teach you a lesson so that you do not repeat the
same mistake again. If you have a decent amount
to invest, then in the present sub prime state,
you can even pick up properties at a very cheap
rate and put it up for rent, thus assured of a
fixed monthly income. You can always sell that
property once the market picks up. In any case,
if you are a novice then catching hold of an
efficient broker and staying with him over a
long period can be beneficial
to both of you.
So, do not just think about investing as a scary
cave where you could get lost, but think of it
as an interesting hobby which allows you to play
monopoly with real money. By treading carefully
and holding on to a good broker and tax
consultant, you can ensure that when you reach
your retirement age, you will have a basket
filled with goodies at your doorstep.
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