Have a bit of money left? Not much, but you have some. No age is ever too young for you to put away some money on a monthly basis. Plus, you don’t even have to be a financial whizz to make it work. Here are some tips on how you can start investing and saving bit by bit.
Cash is Not Your Friend
This may sound like a foolish thing to say but the truth is that cash lying around in your current account is doing you no good. You need to move this into an account that pays good interest. Also, if you feel you are never able to keep up with a good saving regime, earning interest on your saving may be a good way to motivate yourself to stick to it and contribute money to the account every month. Remember, when you are investing, you will have tons of options of where to move your savings. A financial institution will help you through each option. However, it is important that you choose the one with a level of risk that you are comfortable with.
Enroll in a 401(k) Investment Program
The company that has employed you will have a 401(k) plan, and you don’t even need a broker for this investment either. The great thing about this investment plan is that it works well for beginners. It offers a separate place for investors for when they retire, plus most people do not know that this is the account that is not taxable up until the time that you withdraw these funds. It is also possible that your employer offers a Matching Fund account, where they match the funds for you which automatically doubles what you invested.
Before you take on this plan, make sure you do your homework and research on your company’s policies regarding how they will treat your retirement account.
You can invest in the RM200, which takes monthly contribution. You can always drip feed your cash into a fund of your choice to maximize results, where you end up with a lump sum amount. When buying shares, make sure that you invest when the market is down. That way, you will receive more shares at a lower price and if you are in it for the long term, you should be making a lot of money.
Stocks and Bonds
Newbies believe that you make good money in the market, which means you invest in individual stocks. However, that is not true. There are investors who make a fortune through Exchange Traded Funds, and a Unit Trust Fund. The two of these have relatively easier processes and are therefore, a much better investing option for newbies.
Through ETF and UTF you learn exactly how many stocks are under your ownership and in what proportion each of these are. Avoiding individual stocks is actually a smart move, especially if there is an alternative way like this one for you out there.
Open an Investment Margin Account
These are much better than cash accounts. You need to understand how margins are calculated, and the difference between maintenance and initial margin requirements.