Saving your money every month can bring you a step closer to streamlining your finances. However, if you fail to invest your saved money, you are actually letting inflation eat at your savings, which reduces the value of your savings. To achieve your large financial goals, you need to not only save money every month, but you also have to ensure that your savings earn a decent rate of return so that you can quickly achieve your financial goals.
If you haven’t yet started investing, you should begin as quickly and as early as possible. The earlier you start investing in your life, the bigger would be your nest egg at the time of your retirement. Here are some simple steps that you can take to begin investing:
1. Open an account with a stockbroker
If you want to buy stocks, bonds, and other financial securities, you need to open an account with a stockbroker. Opening an account with a stockbroker is quite simple and can be completed online in a few minutes. You need to sign up on the broker’s website, fill out a questionnaire, and upload your identity documents, such as proof of residence, ID card, and proof of income. After due diligence, the broker would open your account. You can then start buying your favourite stocks using an online trading platform provided to you by your broker.
2. Invest with a Robo Advisor
If you don’t want to manage your investments yourself, you can consider investing with a Robo advisor. Robo advisors are computer programs that manage your investments using AI and preprogrammed algorithms. Due to automation, investing your funds with Robo advisors is cheaper compared to human financial advisors. You can confidently invest your funds with Robo advisors as they can handle many clients and different types of investments. It will craft your portfolio based on your risk tolerance and your investment objectives and automatically rebalance your portfolio periodically to achieve desired returns.
3. Invest in Mutual Funds
Mutual funds collect funds from investors and invest them in a basket of securities to earn a return for investors. Depending on the type of a fund and its objectives, a fund can invest in stocks, bonds, indices, commodities, or a specific sector of stocks. For example, an S&P 500 index fund holds stocks that are part of the S&P 500 index. A gold mutual fund would invest in stocks of gold mining companies and ETFs.
Mutual funds are also a cost-effective way of investing in stocks and are ideal for those investors who don’t want to manage their funds by themselves. Mutual funds are managed by professional fund managers, so you don’t have to worry about managing your portfolio. However, mutual funds charge a management fee in return for providing their investment management services to you.
4. Invest in Retirement Savings Accounts
If you are self-employed or are not yet employed but want to build your retirement fund, you can open a retirement savings account with any investment management firm. You have to periodically invest any amount in the fund, and the fund manager would invest it in different types of assets based on your risk tolerance and investment objective. By starting early, you can have a sizable amount in your retirement fund by the time you retire. Many retirement accounts also give you tax benefits, so you can consider investing your savings in them.
