What Is The Best Way To Grow Your Money?

In this post you’ll find ways to grow your money that you can implement today to your life.

 

At one time or another we all find ourselves with portion of money in hands which serve no purpose at the moment. If you’re like most people, that money quickly gets funneled to purchases that have no return on the money put in. The few who think about return on investment and don’t put their money to work, do so because they don’t know how to do it. So, for both, the most important thing to know in order to be able to put spare money to good use is to become aware of what’s out there in terms of money growing opportunities.

What is the best way to grow your money?

When we think about ways to as it’s commonly said: “make your money work for you”, we at some point can’t help but to wonder which way is the best? The truth is that there really is no “one size fits all” in terms of the best way to grow money. The reason for this is that the best strategy to build wealth is dependent on many factors, among them: the amount of money you have to spare on a regular basis, and your tolerance to risk. However, assuming that you have no investing experience, the one way to go before yo gain the ability to make smart investing decisions is by putting your money on investing funds.

 

Investing in funds

Funds are one of the best places for the one who (1) Doesn’t have lots of money to invest on business in a meaningful way, and (2) Doesn’t have enough investing/business knowledge to be able to be successful on investing/business. By investing in funds you get to benefit from the knowledge of the people who buy/sell stocks for a living, without having to pay thousands of dollars for their advice. Those people are the fund managers. Funds buy shares in many companies, and by doing this, you also benefit from a decreased risk of total loss of your invested money. They come up in different flavors, and what characterizes them is the kind of investment instruments and sectors they by from. Some specialize on buying government bonds, while some might focus on new businesses, etc.

One place you can start your investing path is through your own bank. Some banks these days, give to their users the chance to set up an investing account. I did just that a while ago, and by talking to an adviser I learned about two things that might be of value for you: (1) the fund you choose relies heavily on what kind of investor you’re more inclined to be(risk tolerance), and (2) the importance of having a detailed picture of your monthly expenses.

Risk Tolerance

We are taught that the only way to make serious money is by being willing to take large risks. There is some truth to it, but more important than how much you can make. Is how the ups and downs of your money will influence your life and well being. For some people the daily swings on the price of their shares can be a source of constant worry and stress, while to others, money is just a kind of paper that we agreed that it has value. If you’re the latter, more aggressive funds(more socks centered),might be a reasonable way to go. The ups and downs on the value of your portfolio don’t make you lose your sanity. If you’re the first however, aggressive funds, no matter the yearly returns they promise, could be one of those things you’d like to avoid. Notice that although more aggressive funds might be also riskier, they are not as risky as you buying stocks by yourself without any knowledge of investing or training.

When it comes to risk, funds also come in different flavors. The ones with the lowest risk tend to be the ones that focus mostly on bonds, specially the government ones, as opposed to stocks which have a greater risk of losing all of its value. The downside of choosing the safe route however is that you might not earn as much as you would by taking more risks.

How much money to you have to spare without struggling?

After you have a clear idea of what your risk tolerance is, another question which is also important to ask is: how much can you spare without suffocating?. When it comes to investing, most of us tend to believe that we should invest as much money as we can. The truth is that although this might be an ideal scenario, it can be difficult to put into practice. You need to write first down your monthly expenses including leftover money. This money is the one you can put to use by investing. Notice that it’s also advised to have at least 3-6 months worth of money to pay to your expenses before starting on the path of investing. The reason for this is that if something goes wrong, you’ll something to rely on for long enough to be able to get to your feet.

Another important thing is to know how stretching to invest can impact the frequency with which you put money aside to invest.

Stretching impact on consistency

In the end of the day life is short. There is no point in living a miserable life just because you want to grow your money. Don’t get this wrong. There is a difference between cutting down expenses and sacrificing because you have a clear goal ahead, and sacrificing because you just want to see the money on the bank. There is people out there who choose to save their way into making a million dollars, which is by no means a bad thing, but it’s not efficient. We can only stretch so far, and when something goes wrong in our lives, such as the death of a loved one, or illnesses, we can quickly lose our discipline of putting money aside. The little money we were already struggling to put aside is not available anymore. So, if you are to start investing, one good thing to do is to start small and build the habit, and over time gradually increase the amount you invest. The more you stretch to invest the smaller the odds that you’ll put money aside on the long run.

Summary

There are at least two ways you can invest your money. The one we’ve been discussing is by buying shares in funds, and the second is to buy shares by yourself. You can do the first through your bank with the aid of a financial adviser, and the second by simply learning how to invest. For this one great book that I’ve read that you should also, was the book: The intelligent investor by Benjamin Graham.

 

 

It is all about knowledge and experience 😉

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It is all about knowledge and experience 😉

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