One of the biggest fears of most people when they first start investing is that they will make a dumb choice that will prevent them from enjoying the best returns on their investment. They feel anxious and worried about this and that fund, buying bonds, or buying real estate. Their anxieties and worries and indecisions continue to pile up that keeps them from making any investments in the first place.
Well, this is actually a big mistake and for a good reason. A poor choice in investment can take a really long time before it makes any substantial negative impact on your finances. However, it wouldn’t take that long before you notice a negative effect if you choose not to invest at all.
For instance, let’s say that you set aside $100 monthly for retirement. You can choose to put money aside in a randomly chosen investment earning 6% every year or the average or you could study it for 6 months and opt for a better investment with 7% returns per year.
All in all, the main point here is that when you first start to invest, it is much more important for you to start now and try putting away as much as possible as compared to finding that perfect investment.
However, what if you want to invest yet you got several debts piled before you. What should you do then?
It is critical that you always opt for the choice which can offer your dollar with the best long term return.
Thus, the first step you should take is to stop accumulating any new debt. It is important that you avoid incurring any personal debts if you wish to get ahead with your investment.
The second step is for you to set aside some money for retirement that matches that of your employer, assuming that your employer is offering a match. Why is that? This will be an instant return of 50% to 100% on your money. If the employer will match your savings for every dollar, this would instantly double your money. Make sure you grab this first.
After this, you can start paying down those debts with high interest. Usually, it means that you need to pay off things such as credit cards although you need to wait on other things such as house loans or car loans.
Following this, you can now invest in your retirement of a minimum of 10% of your current income or even a minimum of 15% if you feel like you are a bit behind.
Again, investing should be done as early as now. Always go for the best investment that you can find right away then start from there. If you wish to make changes later on, it is easy to do so but making up for the lost time will not be possible.
The secret for investing is to always start now and try contributing as much as you could and use frugality to your own advantage. If you don’t use these two tactics, you might end up finding yourself several years behind where you could have been.