One major difference between the rich and the poor is that the wealthy people have mastered the art of making money work for them and everyone else is yet to master this art. To become wealthy, you have to learn how to make your money work for you. On a daily basis, the rich devise new means by which they can earn interest while the middleclass and the poor masses pay interest. If you desire and want to attain true financial independence, you need to understand how to make money work for you.
Today, I have decided to do a well-researched blog post on three things you can do to start making your money work for you and ways to invest for beginners.
I have acquired enough experience with investments and so I will share with you a couple of great investment lessons that yield bountiful results when put to practice.
These strategies of investment will work for you. Do you know why?
Because I until I made it into the university, I was a complete newbie in the world of finance and investment. Yes, I ran a few business of my own (not the best of choices) but I was fine yet I was a complete newbie. It took me two years after to realize a lot of mistakes I had made that cost me time.
Then a few months passed, I began dabbling with my new found knowledge and opened an account with Nutmeg. I read books and began deep research on the internet.
That was how I began my journey. You see why I know about investing for beginners? I had to walk narrow roads and thin ropes to learn a lot to become a beginner. In 2017, my overall ROI (return on investment) went up by 24.5%. Call it beginner’s luck but I believe it was a result of sacrifice and hard work.
Over the course of time, I have learnt a lot of things. Now, let us begin. All of these things will serve as the foundation of investing for every beginner.
Here are three things on how to make your money work for you. These three things can help you start making money today. It will also assist you to break free of the bad financial habits passed down through your family .You will find yourself managing your money effectively once you follow them.
How to make your money work for you
This is one important step that changes the way you handle your money. Budgeting helps you to make money do what you want it to. By assigning each pound to an item, you are directly controlling the direction your money goes and what it buys. It will quickly help you achieve your financial goals.
With discipline, your budget becomes the most effective tool you develop next to your income to build wealth. Through budget, you gain control over your finances and make wise finance related decisions at the beginning of each month. As soon as you master the process of budgeting, you will be able to avoid bad debt and reach your financial goals faster than you presumed.
If you want to change your current financial status, your budget is the first step to achieving that. In many cases, people create budget but stop after a month or two or fail through on sticking to it. Ensure you create your budget every month, keep an eye on your expenses and make selective changes when needed, this helps you to spend less than you earn daily, weekly or monthly. When you finally practice how to make your money work for you in every month, you begin to notice more progress on your goals.
- Get Out of Debt
The amount of interest you pay per month, your student loans is getting cooked up by your monthly budget, credit card bills and car payments. If the money is saved up, it can be channelled towards savings for retirement. One of the best things you can do right now and your future self will gladly thank you for is getting out of debt and staying clear of it.
Debt is a bad state of financial crisis and it will greatly ruin opportunities that come your way. Need some inspiration? Think about the piles of money you would get your hands on each month if you are to rid yourself of debt completely. Take your time to make moves that will get you out of your current financial state.
If you currently swim in debt, it might look as if you are about to be swallowed by an anaconda (scary right?). Nevertheless, you can easily rid yourself of this menace by taking baby steps as you work your way up to clear off the bigger ones. Once you begin this process, you build “debt paying momentum”. This motivates you to further speed things up.
- Save and Invest Your Money
Finally! You are free from paying off your debt. The next step is to save up funds like it will be your last. As soon as you are able to, put away some amount of money each day, week or month. As soon as you have a six-month emergency fund saved, you will need to carry out research or implement ideas that are worth investing your money into. Additionally, when you save, you become prepared to handle the expected and unexpected that happens through your life’s journey.
Emergency fund saving may be the first baby step you make, but only when you begin to invest can you build wealth. Develop a foresight to look beyond savings for retirement- a simple way to do this is to employ the service of a good financial planner to help you save and invest wisely your money. Ensure you start saving your cash today. Avoid procrastination!
As soon as you begin investing, it is very crucial that you diversify your investments. Avoid putting all of your eggs in one basket. A lot of people often see real estate investment as a good one because it generates a monthly income once you succeed in paying off the property.
Setting specific goals when saving up will help you create a focus and will help motivate you. Just imagine things that you need to pay. Things like your kid’s education, buying a house, or retiring early. These goals are what help you select a specific investment.
Whew! That wasn’t so hard, was it? Now let’s move on to discuss how to make your money work for you through diversification of investments.
The primary investments you can go into today include but not limited to:
- Investing in financial instruments
- Investing in luxury goods
- Investing directly in business
- Investing in starting a business
- Investing in developing your competencies.
You might be thinking: “how about investing in properties”. Well, I did not include it on this blog post on purpose because it is a specialised form of investment that involves a huge amount of capital to start up. As a beginner, you best avoid this form of investing. I recommend you only give this a shot after you are convinced you are no longer a virgin, so to say, in the world of investing.
- How to make your money work for you: Investing in financial instruments
Diving into the world of financial instruments, you will agree with me that it is complex and very diverse. This is why some investors would refer to it as a minefield for beginners. However, there is no business or investment without risk; you just need to possess enough knowledge and experience to help you make the most of it. That is why we are here; we are not going to make it more complicated than it has to be.
Instruments of finance include:
- ETF’s(Exchange Traded Funds)- a basket investment instrument
- Bonds- are the means through which the government can borrow money from us(futures, options)
- Mutual funds-are investment strategies that allows you to collectively pull funds with other investors to buy bonds, stocks, shares and other investments instruments.
The most popular of these types is investing in stock and shares. Stocks refer to a small part of a company.
So you can trade stocks and shares whilst investing as a beginner. When you purchase shares and stocks, you are simply buying a (small) part of a company. There are three major ways through which you can make money from stock and shares:
- Speculation: is a situation that comes to play when a specific share is constantly on the rise as a result of many buying it. Consequently, the shares begin to crash down as soon as people start selling their shares. Buying shares and selling in this kind of situation s majorly subject to emotions, rumour, misinterpretation of information etc.
Speculative vitality has little to nothing to do with the company’s value but a single tweet by a celebrity can have a temporal increased effect.
- Company value: Here, the price of shares is directly linked to a decrease or increase in the value of the company.
- Dividends: Dividends refer to the amount of cash paid by companies (once a year, in many cases) to their shareholders from the company’s profit.
Why am I telling you this?
First, to show you how to make your money work for you and second, because you can do almost nothing to speculative fluctuation except not buy them at all. Complaining about how bad your shares are doing will do you no good and checking them every ten minutes is just a waste of opportunity and time.
The other two forms have created two new types of investing: ‘dividend investing’ and ‘value investing’.
When doing value investing, you search for companies that are currently undervalued with expectation that their value will increase pretty soon. I’ve bought a few companies that are either fairly new or they encountered problems that are being fixed. And yes, my portfolio is doing well.
On the other hand, Dividend investing involves you buy stocks and shares in companies that pay generous dividends. I’m fairly new to this one and still have not experimented with it.
Last but not least, we have robo-investors. I’ll be writing about this in the future.
- How to make your money work for you: investing in luxury goods
This type of investment involves investing in luxuries such as vintage cars, art, jewellery and wine. It does require specialized knowledge especially when buying a piece of art (you are literarily betting cash that its value will increase). Only people who have eyes for art for eyes understand this business.
Want my advice on this investing method? Stay out of it if you don’t have the eye for, and a comprehensive knowledge about, a particular object.
- How to make your money work for you: investing directly in businesses
I am most eager and actively involved in this type of investing.
You see, risk is the death of any investment and the biggest reason why people don’t try out new ventures. It would interest you to know that our perception of risk relies hugely on our level of control. This simply means that the less control we have over a thing, the higher risk we think or perceive it to be.
Don’t believe me? Let me ask you: would you be worried about Thanos destroying the universe if you controlled the infinity stones? No you wouldn’t.
It is the same with trying a new business. We worry too much about investing on online things like the stock market because we have little control over what is happening on the market. In many cases, we just lack the required knowledge, confidence and patience to try bigger investments.
You have more control over local business as compared with stocks and forex and so the risk is slightly lower.
Can you fail? Of course you can. At the same time, if you follow these easy rules for selecting the businesses you invest in you have a bigger chance of not failing.
- How to make your money work for you: start a business
When this idea pops into your head, you hurriedly push it into the recycle bin. It shows up again and you kick it down.
I understand that it is very scary and requires taking a big leap of fate when you want to start a business and a branch of your own. The good news is that you will have complete control over how your business develops and operates but the down side is that you cannot blame anyone else except yourself when things go wrong.
However, investing through starting a business can quickly become one of the most profitable and fulfilling investments you’ll ever make. For example, when I began blogging online, I made myself see it as a hobby rather than a business; this way it was fun with little to no pressure. Now my blog is a good side hustle; I have no doubt that it growth will be bigger if I were to make it a full time business. What I started to share my financial knowledge with you may just turn out to be my ticket to living a financial independence life.
To begin a business you’ll need ideas and courage to make them a reality. Of these, thinking the idea is the easiest part. Here are, for example, 34 ideas on how to make money
Making ideas a reality by acting on them is much harder. But it can be learned. Plus it is so worth it!
When yo look it real close, learning how to make your money work for you isn’t so hard as people paint it.
- How to make your money work for you: invest in yourself
Lastly, quick way to make your money work for you is investing in yourself by gaining new experience. Reading books and going to business, franchise, networking and investing events near you.
These can range from cooking and baking to coding and public speaking. Investing in yourself can involve spending money to learn public speaking, cooking, coding, developing a healthy habit; or getting rid of a very unhealthy one.
Also, remember education always pays off. And I’m talking about education, not degrees.
We’ve come to the end of today’s article…
These are the eight ways to make your money work for you that every eBook centred on investing for beginners should include.
I understand that this might all seem tiring and too much to take in all at once. You can bookmark this page or save it so that you can continue where you left off. Cheers!
Did you learn anything new on post titled “How to make your money work for you?” Have you begun investing? What have you invested in? (Please don’t be shy and share; we can help one another and learn from each other.)