Knowing how to make financially sound decisions is one of the most useful skills to have today. Your future well-being literally depends on it! Despite financial skills being essential to everyone’s success, schools do not really teach them.
Little decisions about what you do with your money today, may yield huge benefits tomorrow–and that’s the reason behind these tips. Hopefully by implementing these simple investment tips you will be setting yourself up for a much more financially secure future.
- HAVE THE PROPER INSURANCE PLAN IN PLACE
When you go for the right insurance plan and you make sure that fits your personal situation, you make a fool-proof investment.
Most people think of term or permanent life insurance when they imagine saving their money in the long term, but there are other insurance plans that are available to you. One of these is mortgage protection insurance.
Most people don’t have much knowledge about this particular insurance apart from the vague prompts they receive in the mail to fill in a form. But according to Fabric’s Ultimate Guide to Mortgage Protection Insurance, these are policies that will pay off your mortgage if you suddenly pass away. If one of your long-term goals includes owning your own home one day, then this is an insurance plan you should take a look at.
2. CHOOSE SOMETHING TO SAVE FOR
Once you set a goal, you become somebody on a mission, and your chances of success are greatly increased. Begin by having a clear idea about what you intend saving for–maybe a vacation or college education for the kids–and then calculate how long you might need to keep up your saving in order to meet your goals.
Your goals could be long-term or short-term, but it should be measurable, and definite in monetary terms.
Any goals that lies less than 3 years into the future qualifies as a short-term goal, and examples include:
- Saving for a small business
- Emergency funds (3-5 months of living expenses typically)
Any goal that lies more than 4 years away qualifies as a long-term goal, and examples include:
- College education for the kids
- Down payment for a home
If you’re planning truly long-term goals like retirement or college for your kids, you should consider stashing your money away into an investment account such as an IRA account or a 529 plan. There will always be risks associated with investments, but they remain a powerful way to leverage the power of compounding as you plan for events far into the future.
3. MAKE YOUR PAYMENTS AUTOMATIC
It takes a tremendous amount of discipline to unfailingly keep some money aside against tomorrow. That’s why automation is so important!
You can ask your bank to automate transfers between your checkings and savings accounts. These services allow you to define how much, exactly when, and also where you wish to transfer your cash. The advantage of using such automated services is not difficult to imagine: you are less likely to miss bills and avoid ruining your credit.
The one downside though is that depending on which bills you are automating, you can actually end up spending more. While automation is imperative for keeping your credit history clean, you still need to exercise a little bit of diligence and keep track of your spending.