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How To Grow Your Money Through Investment

There are two types of people in the world when it comes to investing.

Those who think that they have much, even if they invest a small amount of money.

And then, there are those who think that investing is like being in “The Wolf of Wall Street” movie where you’re acting like a hysterical stockbroker.

But none of these examples are very close to the truth. In fact, investing is nowhere near exciting as you may see it in the films, nor do you need millions of dollars to invest in anything. Sometimes, you need no more than $100, for example.

But of course, it doesn’t mean that you shouldn’t be smart about it. On the contrary. If you want to succeed, you must think and act like an investor. If you need some guidance on this journey, then maybe you should implement some of these tips.

Useful Ways To Make More Money When Investing

Set Your Financial Goals, Along With Investment Horizon

You cannot expect any great results without setting the goals first, otherwise, everything is going to be pointless. Keep in mind that your financial goal should be quantifiable. Saying that you want to earn more money cannot be defined as a quantifiable goal.

On the other hand, if you say that you want to earn $300,000 by the time you’re sixty, that’s already much more acceptable.

If you’re relatively new to this, and you need some beneficial advice, then for starters, it would be smart to talk to a financial advisor who is going to tell you exactly what steps to make to efficiently grow more money.

The Magic Of Compound Interest

What does this term represent? To make it simpler and clearer, we will define it as interest you earn on interest. Generally speaking, it’s something that helps your wealth to grow quicker. Namely, it makes a certain amount of money grow faster than the simple interest due to the fact that you will get returns on the cash you invest, along with the returns on each compounding period.

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So what does this mean then? It means that you do not have to take away a substantial amount of money, in order to achieve your goals. Now, the question is, is it difficult to calculate compound interest or not? Namely, if you’re looking for a less complicated way to do it, then it would be best to simply use a compound interest calculator and you’ll be done in a blink of an eye. All other methods will take way more time.

Avoid Permanent Losses

This is something that everyone should strive for, and certainly one of the best ways to accomplish that is to have a diversified portfolio. What does this mean? It means that you shouldn’t be having all your money concentrated in a single industry, business, or end market.

Remember that precisely diversification is going to help you limit all your losses to several stock picks, while on the other hand, your best winners will more than make up for all their losses.

To make things a bit clearer, let’s put things this way. For instance, if you invest the same amount of money in twenty stocks, and one of them experiences a downfall, you won’t lose more than five percent of your capital.

Furthermore, if one of your stocks goes up to two thousand percent in value, this is going to double the value of your portfolio! How amazing is that? Don’t ever forget that diversification can help you avoid permanent losses and at the same time, give you exposure to wealth-building stocks.

Commodities May Be A Good Idea!

Trading commodities, such as silver and gold isn’t something that can be seen frequently, particularly when they are trading at the lower end of the five-year range. Namely, metrics like that showcase the direction the commodities are currently taking.

Generally speaking, commodities such as silver are palpable assets that everyone can hold onto. Now, there are other types of commodities that are also worth considering, such as energy, metals, and agriculture.

Many seasoned investors will tell you that investing in commodities is almost like investing in futures agreements. This is a pre-arranged contract to purchase a certain quantity at a particular price in the future.

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What About The Bonds?

Growing your wealth over the long term is for sure the most essential step. Once you’ve managed to build your wealth, and are slowly reaching your financial goal, one of the best ways to make sure you’re doing great financially, is to invest in bonds.

What do bonds represent? They can be defined as loans to the government or a certain firm. There are three most common types of bonds and below we will enumerate them:

  1. Corporate bonds that are issued by businesses
  2. Treasury notes, bills, and bonds, issued by the U.S. government
  3. Municipal bonds, issued by state and local government

What About Real Estate?

Now, to a majority of people investing in real estate seems like an impossible dream. But does it necessarily have to be that way? Most definitely not. Of course, if you want to purchase an entire commercial property, then that may seem too ambitious, however, bear in mind that practically anyone at any acceptable financial level can invest in real estate and earn some cash from it.

Of course, in this type of situation, it would always be best to own first-class, productive real estate because that’s a great way to slowly build your wealth. What’s interesting is the fact that many experienced investors believe that it’s much better and more stable to invest in real estate, than in stocks.

Furthermore, a real estate investment trust or REIT is probably the most accessible way to invest your money in real estate. Additionally, REITs trade on stock market exchanges just like any other public business. Below are some examples:

  • Public Storage
  • American Tower
  • AvalonBay Communities

As you can see, investing is not as scary and intimidating as you may think it is, however, if you’re just a beginner, then it would be advisable to take a look at our tips and implement every single one of them.

 

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