You have a bit of money that you want to save, but the sheer number of available choices can give you a headache. Which is actually a great problem to have, all things considered. The good news is that this is a fairly easy issue to resolve with some reading. The first step you would need to do is to find out what kind of an investor you are. Do you want your money safer than in the hands of the World Bank? Or are you willing to gamble for great rewards? In investment talk, what is your Investment Risk Profile? The next step would be to find out the different kinds of investment “vehicles” in the market.
Where to Invest Your Money
Mutual Funds are money pooled from different people and invested in different vehicles. A fraction may be invested in government bonds, and the rest may be invested in stocks, etc. Different funds have their mix of investments depending on the investment outlook of that fund. Furthermore, the investment outlook of the fund you choose should match your investment risk profile. You only need to buy a share in mutual funds and the good thing about it is that they are managed by professionals. You can read up on the top ten mutual funds in your country so you can decide which will give you more returns. You don’t need to be actively monitoring your investment like you would shares of stocks.
Shares of Stocks
Shares of stocks are like buying part-ownership of a company. Investing in the stock market can be as simple as buying a share. If you don’t have a lot of experience or knowledge in stock trading, you might want to confine your investments to blue-chip companies. What can be complicated about it is if you are looking to actively trade in order to gain. The best strategy is to just leave it there to accumulate, if it’s a blue chip company with a great outlook.
Personal Equity and Retirement Account (PERA)
If you’re investing for retirement, the best vehicle for you would be the PERA. It would have the benefits of a mutual fund, without the interest income taxes. An additional benefit that you can get from a PERA account is tax incentive. The only drawback is that you can only benefit from a PERA account when you retire, or you would need to give back the tax incentives that you got.
Government Savings Schemes
There are governments that provide savings schemes to its people on top of their social security programs. In the Philippines, two different government agencies offer savings and retirement supplementary programs. One is the SSS Flexi-fund, and the other is the PAGIBIG MP2 fund. In India, they have several supplementary schemes that would ensure a worker’s financial freedom.
Why Invest Your Money?
Finally, not living beyond your means as well as saving up for the future is the way to financial freedom. In addition, Investing is a way of future-proofing your money. This is achieved by putting it in vehicles that would make sure the interest outstrips inflation. Your investment should also be able to provide you with enough income when you retire. Ultimately, having a worry-free life is why you should start investing now.