Where should You Invest your Money?
Once you have decided to start investing, it is really hard to actually decide on where you should invest your money. There is so many different investment vehicles and markets to invest your money that it can get a little overwhelming.
That is why I came up with a simple list (I am a bit of a list maker if you haven’t noticed already) that will help you to start deciding in what investment products/vehicles that could help you achieve your dreams.
Invest in what you know!
Understand your risk tolerance and how you may act if there are any market corrections
Understand that there are multiple investing vehicles out there, such as the bond market, term deposits, REIT’s (Real-estate investment trusts)… It is not all just shares, crypto and cash in the bank.
Consider talking to a trusted advisor who may be able to align your dreams, personal values and financial situation with the investing vehicle that is a right fit for you.
First thing, you need to make sure that you are investing in something that you understand!
The Great Oracle of Omaha, or better known as Warren Buffet, potentially the greatest investor of our time, states that he “Only invests in what he knows and understands… the business has to be simple”
Warren Buffet is a world renowned investor and has an amazing track record of beating the S+P 500 index (An index that tracks the top 500 companies within the USA) over a very long period of time, by doing what he knows best. By buying businesses, because he knows business!
Therefore, what you should do is invest in what you know best too. You should understand what you are investing your money, because if you don’t understand it and your investment decreases in value considerably, you may sell at the wrong time.
In fact, the great Peter Lynch, another long-time investor that I admire said, “You can outperform the experts if you use your edge by investing in companies or industries you already understand.”
Secondly, you should understand your risk tolerance…
One really easy way to do this is by investing a small amount of your hard earned cash in the markets, cash that you don’t need or you are happy to never see again.
I used this simple method of putting money into a micro-investing app (whereby there are no brokerage fees and you can invest as little as $5) to start to understand my own risk tolerance. Sometimes, you just need to have some skin in the game and take a little risk to see what you are like when the markets are going up or coming down.
Thankfully, I was able to see a bit of both, as I had money invested last year in March 2020, whereby the market corrected by a bit over 30%. Meaning I saw my investment and hard-earned money decrease significantly, but I was not phased by it due to my own education, in fact I saw opportunity to buy in even more.
But there were some that did not actually do this, in fact some took money out of their super and sold at the worst possible time.
Which is why understanding risk tolerance is so important to understanding where you will invest your money!
Thirdly, Shares, Crypto and real-estate are not the only investment vehicles out there!
In fact, there is a whole world of financial markets out there…
Ranging from Bonds (whereby you loan money to a bank, government or business and receive interest on that loan essentially) to the Foreign Exchange markets (whereby you can exchange currencies etc.).
You can even buy into Real-estate investment trusts, if you don’t want to buy and hold a physical warehouse or factory, you could buy a portion of it through the REIT.
Which brings me to my final point.
The financial world is a jungle, full of predators, poison ivy and dangerous products/investment vehicles that could leave you disoriented and full of dismay.
That is why having a local guide, such as your trusted Financial Advisor, who is a professional in navigating said financial jungle, can show you how to not only navigate through the jungle. But can show you the plants that you can eat that won’t kill you financially, show you a clear path through so you can reach the other side and also reduce any stress or anxiety you may have about getting lost along the way.
Investing can be scary, it can be exciting and it can truly help you to attain all of your dreams…
And having a trusted advisor who can guide you into the right investment vehicles is worth more than anything you could ever dream of.
If you follow these four simple steps, your investing journey will be smooth-sailing and you will know exactly where to invest your money that is not just right for you, but will help you sleep better at night!
Which is probably the most important thing when it comes to investing and finance.
Until next time,
Take Back Control
If you have found this Blog valuable, I would love it if you shared it with friends and family. The more the merrier, as I want to see each and every one of you learn to Take Back Control of your Life-Health-Wealth !
