Photo by Nataliya Vaitkevich
Wilbert Guilford Jr. is the author of Financial Planning for the 99%, a book of sound and practical financial and economic advice that anyone–from the average Joe to the sophisticated Jane–can understand. If you’re looking to start saving for a rainy day, this book is a must-have guide!
You may be reading this article because–like everyone else–you are a bit concerned about your finances. That’s totally normal. The first step towards anything is to always wash away any feelings of apprehension and doubt. If you want to do something, you need to do it with conviction.
Now, the idea of investing–or anything related to lots of money–can be daunting. This is especially the case for those who’ve never dipped their hands into anything. The most people will do is to do a bit of light budgeting, but that is not enough. If you want to achieve financial success, you need to grow your money.
Money’s a lot like a seed. It’s great that you have some in your account, but if you don’t plant–see: invest–it on the ground, you’ll always be personally on the lookout for more. The thing with investing, though, is if you’ve made a proper go at it, the money will come–figuratively–rolling in. Invested money grows over time, helping you with your goals–whether it’s taking a vacation over into Europe, buying a good house, or helping your children live a comfortable life.
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Where to Start Investing as a Newbie
With that out of the way, you’re ready. You’re gearing up to break open your piggy bank and dump all of what’s in it into an investment. Well, just wait a minute! Put that hammer down, and let’s take a breath.
The first thing you need to do before anything is to do a wellness check on your finances. You don’t just need to save for a rainy day; you need to have funds for a storm!
As such, make sure that you have an emergency fund. Having an emergency fund means having a safety net. For those just starting out, maybe aim for 3-6 months of living expenses that’s deposited in an easily accessible account. This fund will be a life-saver–that much is a guarantee.
On top of that, make sure that you’re not carrying any high-interest debts. Having these can be a burden. They’ll be a sore weight on you as you begin investing, so make sure that you’ve paid all of them.
Now, you’ve made a comfortable foundation, and you’ve cut off all the waste. The next thing is to create a budget with your new financial framework. Keeping a budget helps you track where your money is going, which helps you identify which channels need closing down.
This is what you need to begin with as an average person. Saving for a rainy day and looking for ways to cash some of that in.
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Choosing Your Investment Vehicles
Different types of investments exist for people to stake their money on and potentially build up their personal wealth.
- There are stocks that represent partial ownership of a company. They offer the possibility of high returns, although their risks are equally high as well. They’re high-risk but high-reward.
- Bonds, on the other hand, are, in essence, loans that people give to government entities or corporations. They are most often less risky than stocks, but their returns are low too. They’re very stable, but you need to work more to make things work in the long run.
- Another convenient way of investing is to take up mutual funds and ETFs. These are diversified portfolios that cover stocks, bonds, and/or other assets. Mutual funds are a basket of securities that offer a diversity of returns.
Further Steps on Spending What You’ve Been Saving Up for a Rainy Day
Start with small, regular contributions. Even small, consistent contributions can add up significantly over time. Really consider setting up automatic transfers from your checking account to your investment accounts.
Diversify your portfolio, and don’t put all your eggs in one basket. Diversification helps reduce risk and improve your chances of achieving your investment goals.
While many people can successfully invest on their own, you have to seek professional guidance from a financial advisor can be beneficial, especially for those who are new to investing or have complex financial situations.
Lastly, the investment landscape is constantly evolving. Stay informed about anything and everything whenever possible.
Financial Planning for the 99% is your best guide to being financially stable. Grab a copy now through this link!
