You're not a complete idiot when it comes to money. You know how to open a bank account and how to run the numbers when computing interest rates. But why do most of us find investing such a difficult subject to tackle?
Christy Heady, the author of “The Complete Idiot's guide to Making Money on Wall Street" shows us the Top 10 steps in Investing for your Future.
1. Start small, do it often. You don’t need a gazillion pesos to begin your investing program. Even 100 Php a month is a great way to start creating your wealth. In fact, if you are 25 years old and invested only 100 pesos a month every month that earned 12% a year until you retired, you would have close to a million pesos. You don’t need a lot of money to get started---just discipline. The actual habit of putting money away is more important than the amount that you put away. Once you establish the habit, you’ll have an easier time accumulating wealth. Remember before you can invest you must learn to save.
2. Think long term no matter what. Investment success isn’t rewarded overnight. Unless you were fortunate to have Uncle Henry S. to leave you a fortune in his will, you’re going to have to work at creating your wealth over the long term. Having a Long term window on your investment actually lessens your risk. Furthermore you’ll avoid making rash decisions based on emotions. Take a page out of Steven Covey’s Playbook: “begin with the end in mind.”
3. Understand that investing and saving are not the same thing. Investing your money allows you to make your money work for you as hard as you do for it. Saving your money---either in a low interest-bearing savings account or under your mattress---only guarantees you two things. Low interest and dust bunnies. Keeping your money in a inert investment vehicle also faces the insidious problem of inflation. Since Inflation has been constantly present in the past. Keeping your money under your bed will actually leave you with less buying power than when you started saving.
4. Shop around for a financial adviser and compare services. Don’t just rely on Tito Boy, the family broker extraordinaire. You’ll pay a high price for investment advice even if it’s a family member. Learn how to do your own investment research and create your own investment plan. Ultimately you save thousands of pesos in commissions and fees.
5. Treat yourself like a bill, and pay yourself first. Even before you pay the cable man, the electric bill, and your daughter’s Girl Scout dues. Pay yourself first. Put some money away. This habit guarantees that you’re putting you and your family ahead of all other obligations. It’s a great way to build your wealth!!! 10% of what you earn is a good starting point. Eventually you’ll find that you can build your savings and save up to 15% or 20% of what you earn. What’s important in this step is to prioritize the savings before the expense
6. Don’t just buy---diversify! This rule follows the old adage “Don’t put all of your eggs in one basket.” By allocating your money into several different investments, you reduce your risk. If you put all of your eggs in one basket and drop the basket, they all break --- egg yolk everywhere. Put your eggs in different baskets and drop one basket, Voila!! Only one cracked shell…. And all the others are still intact.
7. Don’t follow John Q. Public. One of the riskiest investment decisions is to make is based on what other people are saying or doing. You can listen to your friend’s stock tips or watch market gurus on CNBC but don’t blindly invest in the product without doing your research. Living in the information age gives us tons of advantages. There are a lot of financial information sources out there that are a treasure trove of knowledge. My personal favorite: http://www.investopedia.com/
8. Do your homework. It is amazing how many people spend so much time investigating what house to buy or where to go on vacation but give little time to researching their investments. Learn as much as you can about the investment, such as its performance history and how risky it is. Most of us are already capable of doing our financial investment research already. We just call it by a different name: shopping. If you want to get the best investment deal you have to shop around for the best value at the best price. This goes for all the investment vehicles like mutual funds, stocks, real estate and businesses.
9. Know that if it sounds too good to be true, it probably is. Be wary of the investment professional who tells you about a “sure thing” in which you should invest all of your money. First, it doesn’t practice the art of diversification. Second, the investment professional is probably an investment clod. A bird in the hand is worth two in the bush. Enough said.
10. Don’t let your investment keep you up at night. If you can’t sleep, Sell!! If there is an investment that is making you nervous and you can’t catch those ZZZZZs , sell it. There is not investment worth losing sleep over--- Except our children of course.
Christy Heady, the author of “The Complete Idiot's guide to Making Money on Wall Street" shows us the Top 10 steps in Investing for your Future.
1. Start small, do it often. You don’t need a gazillion pesos to begin your investing program. Even 100 Php a month is a great way to start creating your wealth. In fact, if you are 25 years old and invested only 100 pesos a month every month that earned 12% a year until you retired, you would have close to a million pesos. You don’t need a lot of money to get started---just discipline. The actual habit of putting money away is more important than the amount that you put away. Once you establish the habit, you’ll have an easier time accumulating wealth. Remember before you can invest you must learn to save.
2. Think long term no matter what. Investment success isn’t rewarded overnight. Unless you were fortunate to have Uncle Henry S. to leave you a fortune in his will, you’re going to have to work at creating your wealth over the long term. Having a Long term window on your investment actually lessens your risk. Furthermore you’ll avoid making rash decisions based on emotions. Take a page out of Steven Covey’s Playbook: “begin with the end in mind.”
3. Understand that investing and saving are not the same thing. Investing your money allows you to make your money work for you as hard as you do for it. Saving your money---either in a low interest-bearing savings account or under your mattress---only guarantees you two things. Low interest and dust bunnies. Keeping your money in a inert investment vehicle also faces the insidious problem of inflation. Since Inflation has been constantly present in the past. Keeping your money under your bed will actually leave you with less buying power than when you started saving.
4. Shop around for a financial adviser and compare services. Don’t just rely on Tito Boy, the family broker extraordinaire. You’ll pay a high price for investment advice even if it’s a family member. Learn how to do your own investment research and create your own investment plan. Ultimately you save thousands of pesos in commissions and fees.
5. Treat yourself like a bill, and pay yourself first. Even before you pay the cable man, the electric bill, and your daughter’s Girl Scout dues. Pay yourself first. Put some money away. This habit guarantees that you’re putting you and your family ahead of all other obligations. It’s a great way to build your wealth!!! 10% of what you earn is a good starting point. Eventually you’ll find that you can build your savings and save up to 15% or 20% of what you earn. What’s important in this step is to prioritize the savings before the expense
6. Don’t just buy---diversify! This rule follows the old adage “Don’t put all of your eggs in one basket.” By allocating your money into several different investments, you reduce your risk. If you put all of your eggs in one basket and drop the basket, they all break --- egg yolk everywhere. Put your eggs in different baskets and drop one basket, Voila!! Only one cracked shell…. And all the others are still intact.
7. Don’t follow John Q. Public. One of the riskiest investment decisions is to make is based on what other people are saying or doing. You can listen to your friend’s stock tips or watch market gurus on CNBC but don’t blindly invest in the product without doing your research. Living in the information age gives us tons of advantages. There are a lot of financial information sources out there that are a treasure trove of knowledge. My personal favorite: http://www.investopedia.com/
8. Do your homework. It is amazing how many people spend so much time investigating what house to buy or where to go on vacation but give little time to researching their investments. Learn as much as you can about the investment, such as its performance history and how risky it is. Most of us are already capable of doing our financial investment research already. We just call it by a different name: shopping. If you want to get the best investment deal you have to shop around for the best value at the best price. This goes for all the investment vehicles like mutual funds, stocks, real estate and businesses.
9. Know that if it sounds too good to be true, it probably is. Be wary of the investment professional who tells you about a “sure thing” in which you should invest all of your money. First, it doesn’t practice the art of diversification. Second, the investment professional is probably an investment clod. A bird in the hand is worth two in the bush. Enough said.
10. Don’t let your investment keep you up at night. If you can’t sleep, Sell!! If there is an investment that is making you nervous and you can’t catch those ZZZZZs , sell it. There is not investment worth losing sleep over--- Except our children of course.
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