Home » A Complete Guide to Saving and Investing Money

A Complete Guide to Saving and Investing Money

Saving money is the foundation of financial success. Having some money on the side allows you to take advantage of certain situations like buying shares when the market crashes or starting your own business when you manage to spot a gap in the market. However, saving money is never going to be easy. Not to mention that choosing when and how much to invest can be quite difficult as well. That’s why we’ve come up with a guide that’s guaranteed to help you out when it comes to saving money and investing.

A Complete Guide to Saving and Investing Money

Saving isn’t the same as investing

If you’re not a child of a banker or investor, chances are you never got a chance to learn what the real difference between saving and investing is. And obviously, this is an important notion to be aware of if you want to achieve financial success. Saving money involves putting aside a portion of the money you earn and keeping safe and liquid, which means you’re able to access it quickly (at most 5 days) when necessary.  Investing, on the other hand, is the term used for using the money you’ve earned to buy an asset you believe will gain more value over time. Both of these concepts have played an important role in your life if you want to achieve financial success. Not only that, but how you handle saving and investing can have a huge impact on your overall stress level.

Saving a few extra bucks is worth the bother

No matter how much effort you’ve put into saving money, chances are you’ll occasionally find yourself tempted to spend an extra $5 on something you don’t really need. After all, it’s just $5, right? Wrong. If you want to use your money smartly, thinking this way is hardly going to get you anywhere. This is where it’s very important for you to understand that $5 today may be worth much more in a year. And every time you spend some extra money, you’re wasting the opportunity to increase your savings. But why is important to constantly put money into your savings account? Well, every single buck you manage to save can be invested in something that’s going to help you earn money, be it shares, gold or an entire new business. So, the next time you’re tempted to spend those extra $5, try to restrain yourself from it and save the money instead.

A Complete Guide to Saving and Investing Money - 3

There are plenty of ways to save money

If you don’t already have a habit of saving money, developing it is something you’ll definitely want to do. Luckily, saving money is much easier than some people would have you believe. All it takes is some careful planning and self-control. But how exactly do you save money? The most important thing to do when trying to sock away some money is to create your monthly budget and stick to it no matter what. That way, you’ll know exactly how much you can spend in order to be left with some cash at the end of each month. Of course, applying some money-saving techniques can come in pretty handy. For example, if you’re a smoker and you decide to ditch cigarettes, you’ll be saving a significant amount of money on a monthly basis. You can also try to use coupons when shopping or buy in bulk when shopping for household items.

Entering the world of investing

Once you finally have enough money on the side, it’s time to start investing it. Of course, this is also where you’ll have to do some planning in order to be able to succeed. First of all, you’ll need to set goals for your investing. For example, if you want to invest in a property, your goal can be selling that property for a higher price in the next 5 years. The same rule goes for any other types of investment. Once you know what your goals are, it’s time to make your first move. Here, we recommend restraining yourself from using phrases such as “beginner’s luck” since investing isn’t the same as gambling at all. You need to do a lot of research before you invest in something and base your decisions on the data you’ve managed to collect.

A Complete Guide to Saving and Investing Money - 5

Debt and investing

If you’re in debt, investing your money can turn out to be pretty difficult. In such a scenario, you first have to choose whether you’ll focus on investing or paying off your debt. Both choices can seem pretty reasonable depending on your current situation. Paying off your debt on time means you’ll reduce stress and be able to withstand personal emergencies. On the other hand, if you focus on investing, you’ll hardly be able to pay off your debt anytime soon. In situations like this, there are two variables you need to compare – The rate of after-tax interest you’ll be paying on your debt and the after-tax rate of return you’re aiming at on your investments. If your investments can earn you more than your interest rate, you should go for it. If this isn’t the case, you should pay off your debt before you invest.

Diversifying your investments

One of the topics you’re guaranteed to hear a lot about when entering the world of investing is diversifying your investments. The concept here is – the more things you invest in, the less likely you are to be hit in case some of your investments fail. Therefore, you should think about different ways you can invest the money you’ve managed to save. The stock market is probably your first choice, but with the current state in the economy, you might want to look elsewhere. Investing in gold has proven to be quite a trend since we saw a lot of successful investors do it. If you decide to buy bullion, make sure you find a good gold dealer to turn to. Of course, another option you can go for is investing in property. You can either buy a property and rent it, or try to flip it for a higher price.

A Complete Guide to Saving and Investing Money - 4

It’s all about how much effort you put into it

Investing is all about making the right decisions at the right time. So, if you want to get rich, you’ll have to keep working on your investing skills as much as you can. On top of that, you’ll have to stay on top of the latest trends in the world of investing. And there are plenty of ways to do so. First of all, if you decide to invest in shares, you’ll have to keep up with the stock market and watch what successful investors are doing. If you plan to use the money you’ve saved to start your business, you’ll need to find something the market needs and you’re good at. When it comes to things like property and gold, you’ll also have to make sure you stay on top of prices at all times. Only that way will you be able to make the right decisions and actually earn money by investing.

The bottom line is, both saving and investing money are processes that require a lot of research, effort and time. However, if you really want it, there should be nothing stopping you from stashing some money, finding something to invest it in and achieving financial gain you’ve always dreamed of.

Follow: