Welcome to the world of investments, where living your dream through financial freedom, living life on your own terms, or making more money with money is right at your doorstep. First of all, investing kinda sounds like this super-scary, members-only club—but trust me, it’s really actually an awesome adventure when you can play with your money. So grab your favorite snack, and let’s get into the basic elements of investing, wherein we break it all down into bite-sized, enjoyable pieces!
Why Invest?
But before that, let me start with why you should invest in the first place: quite simple—money can grow! When you invest your money, there is a possibility of earning more money on top. That would be called compound interest, and that’s magic but very real! Now suppose you had invested $1,000 in certain stocks that grow, on average, 7% annually. Then, after one year, you would have $1,070. During the second year, you would be making money based upon $1,070, and not off that initial $1,000 which you had invested. If you gave it time, that growth can add up a lot. Therefore, if you want to make your hard-earned cash a money-generating machine, then invest!
Setting Your Objectives – Getting Started
Before you enter into the investment pool, you really need to know your “why.” Some of the more common financial goals are:
- Retirement Savings: A pension for when one wants to kick back and relax.
- House Purchase: The buying of that dream house with a white picket fence.
- Education Funding: The apportionment of money for one’s own or children’s education.
- Traveling: Dream of traveling the world? Well, through investing, that’s one possibility!
Knowing your goals will direct you in the right direction with your investment strategy and hence eventually keep you motivated. Now, onto the fun part—how to invest!