Investing Money To Make Money For Beginners

Investing money to make money should be a good way to earn a decent income, but the fact is that most people fail. They either put in too much or too little money or they buy into a bad product. In this article, I will teach you how to invest wisely and see returns on your investment every single month.

Investing Money To Make Money For Beginners – As many of us know, the attitude that needs to be applied before you start investing money is the most important. You should know about how to invest money wisely for beginners. For example, there are numerous things that you should take note of before you actually invest your earnings.

Play the stock market.

Day trading is not for the faint of heart. It takes grit and determination. It takes understanding the different market forces at play. This isn’t something intended for amateurs. But, if learned and learned well, it is a way where you can quickly — within the span of hours — make a significant amount of money with a relatively small investment.

There are also ways to hedge your bets when it comes to playing the stock market. Whether you play the general market or you trade penny stocks, ensure that you set stop-loss limits to cut any potential for significant depreciations. Now, if you’re an advanced trader, you likely understand that market makers often move stocks to play into either our fear of failure or our greed. And they’ll often push a stock down to a certain price to enhance that fear and play right into their pockets.

When it comes to penny stocks, this is further exaggerated. So you have to understand what you’re doing and be able to analyze the market forces and make significant gains. Pay attention to moving averages. Often, when stocks break through 200-day moving averages, there’s potential for either large upside or big downside.

Invest in a money-making course.

Investing in yourself is one of the best possible investments you can make. While you might not be able to pinpoint an actualized return on investment, there’s no money that’s better spent. Invest in yourself. Invest in your education. Learn. Adapt. Grow. Discover what you’re passionate about.

There are loads of money-making courses on the internet. The hard part is choosing the right one. From ebooks to social media marketing, search engine optimization and beyond, the possibilities are endless. While many money-making gurus might pop up on social media, not all courses are created alike. Spend time doing your due diligence and research to choose the one that’s right for you.

Trade commodities.

Trading commodities like gold and silver present a rare opportunity, especially when they’re trading at the lower end of their five-year range. Metrics like that give a strong indication on where commodities might be heading. Carolyn Boroden of Fibonacci Queen says, “I have long-term support and timing in the silver markets because silver is a solid hedge on inflation. Plus, commodities like silver are tangible assets that people can hold onto.”

The fundamentals of economics drives the price of commodities. As supply dips, demand increases and prices rise. Any disruption to a supply chain has a severe impact on prices. For example, a health scare to livestock can significantly alter prices as scarcity reins free. However, livestock and meat are just one form of commodities.

Metals, energy and agriculture are other types of commodities. To invest, you can use an exchange like the London Metal Exchange or the Chicago Mercantile Exchange, as well as many others. Often, investing in commodities means investing in futures contracts. Effectively, that’s a pre-arranged agreement to buy a specific quantity at a specific price in the future. These are leveraged contracts, providing both big upside and a potential for large downside, so exercise caution.

Trade cryptocurrencies.

Cryptocurrencies are on the rise. While trading them might seem risky, if you hedge your bets here as well, you could limit some fallout from a poorly-timed trade. There are plenty of platforms for trading cryptocurrencies as well. But before you dive in, educate yourself. Find courses on platforms like Udemy, Kajabi or Teachable. And learn the intricacies of trading things like Bitcoin, Ether, Litecoin and others.

While there are over 3,000 cryptocurrencies in existence, only a handful really matter today. Find an exchange, research the trading patterns, look for breakouts of long-term moving averages and get busy trading. You can use exchanges like Coinbase, Kraken or Cex.io, along with many others, to make the actual trades.

Use peer-to-peer lending.

Peer-to-peer lending is a hot investment vehicle these days. While you might not get rich investing in a peer-to-peer lending network, you could definitely make a bit of coin. Which lending platform do you use? Today, there are many to choose from, but the most popular ones include Lending Club, Peer Form and Prosper.

How does this work? Peer-to-peer lending platforms allow you to give small bursts of capital to businesses or individuals while collecting an interest rate on the return. You get more money than you would if you placed it in a savings account, plus your risk is limited because the algorithms are doing much of the work for you.

Once you identify the offer, you can dig in and do some research — then, you can either take the deal or not. You’ll have your risk evaluated based on a proprietary algorithm that includes employment and credit history, and you’ll be able to make the decision to invest based on a variety of well-thought-out data.

Build savings for short-term goals and emergencies.

Though we tend to use the terms saving and investing interchangeably, they’re not the same thing. Savings is cash you keep on hand for short-term planned purchases and unexpected emergencies.

For instance, if you’re saving money for a car that you plan to buy within the next year or two, keep it 100% safe in a high-yield bank account. You might save for annual holiday gift-giving or unexpected medical expenses.

A common question is whether you should invest your savings since the interest paid on a bank account is so low. The answer is almost always no.

Unless you have a huge amount of cash reserves, your savings should not be invested because the value could drop at the exact moment you need to spend it.

The purpose of savings is not to put it at risk to make it grow, but to preserve it so you can tap it in an instant if you need it.

If you don’t have an emergency fund that’s equal to at least 3 to 6 months’ worth of your living expenses, make accumulating one a top financial priority. Set aside 10% of your gross pay until you have a healthy cash cushion to land on if you lose your job or can’t work for an extended period.

Don’t Shy Away From the Stock Markets

The stock markets are traditionally seen as a volatile and risky investment hub. However, with a little bit of research into the basic principles of stocks and some self-set ground rules, it is possible to earn robust financial gains.

To begin with, investors can purchase a few shares and limit their exposure to risk. As you understand more about the nuts and bolts of trading in stocks, you can gradually purchase more shares and raise your stake in a company.
As an investment instrument, stocks are highly liquid in nature. Buying and selling stocks is fairly straightforward and can easily be done with a click of a button on your smartphone.

Invest money to accomplish long-term goals.

Investments are the opposite of savings because they’re meant to grow money that you spend in the distant future, namely in retirement. Investing is also best for smaller goals you want to achieve in at least 5 years, such as buying a home or taking a dream vacation.

Historically, a diversified stock portfolio has earned an average of 10%. But even if you only get a 7% average return on your investments, you’ll have over $1 million to spend during retirement if you put aside $400 a month for 40 years.

So, start investing a minimum of 10% to 15% of your gross income for retirement. Yes, that’s in addition to the 10% for emergency savings that I previously mentioned. Consider these amounts monthly obligations to yourself, just like a bill with a due date you receive from a merchant.

If saving and investing a minimum of 20% of your gross income seems like more than you can afford, start tracking your spending carefully and categorizing it. I promise that when you see exactly how you’re spending money, you’ll find opportunities to save more.

After you build up a healthy emergency fund, continue putting aside 20% of your income. You could invest the full amount or invest 15% and save 5% for something else, like a new car or a vacation.

Leverage tax-advantaged accounts for faster results.

One of the best ways to invest money is under the umbrella of a tax-advantaged account, like a workplace 401k or 403b. If you’re self-employed, you have options too, such as an IRA, SEP-IRA, SIMPLE IRA or a Solo 401k.

Retirement accounts help you accumulate a nest egg and cut your tax bill at the same time. When you invest in “traditional” accounts, you contribute on a pre-tax basis. That means you defer paying tax on both contributions and earnings until you make withdrawals in the future.

Another option is to contribute to a Roth 401k or Roth IRA, where you pay tax on contributions upfront, but get to take withdrawals completely tax-free later on.

If your employer offers a retirement plan, start participating as soon as possible—especially if they match some amount of your contributions. Here’s why matching is such a big deal:

Let’s say you get a full match on the first 3% of your salary that you contribute to a 401(k). If you earn $40,000 a year and contribute 10% of your salary, that comes out to $4,000 (10% of $40,000) a year or $333 a month. If that’s all you invested over 40 years with a 7% average return, you’d have a nest egg over $875,000.

But now consider what happens when your matching funds kick in: If your employer matches contributions up to 3% of your salary, they’ll add an additional $1,200 (3% of $40,000) a year or $100 a month into your account.

Now you’re socking away $5,200 ($4,000 plus $1,200) a year instead of $4,000, which means you’ll have over $1.1 million after 40 years. That’s about $260,000 more thanks to those additional matching funds!

Even if your employer doesn’t match contributions, I’m still a big fan of using workplace retirement accounts because they give you multiple benefits. Not only do they automate investing by deducting contributions straight out of your paycheck before you can spend them, but retirement plans also cut your taxes. And you can take all your money with you—including your vested matching funds—if you leave the company.

In addition to retirement plans, there are other types of tax-advantaged accounts that help you save money for different purposes. One is a 529 savings plan, which allows earnings to grow tax-free if you use the funds to pay for qualified education expenses.

Another account that offers huge tax savings is a health savings account or HSA. It’s available to pay for qualified medical expenses completely tax-free when you have a high deductible health plan.

Enroll in a Retirement Plan

Retirement is no longer confined to those in their 60s. Gen Z has a whole different notion of retiring early after having created significant wealth so that they can pursue their passions while they are relatively young. Therefore, it is never too early to plan the process of retirement! Retirement planning involves the setting aside of money, investing it, and then directing it towards your retirement savings fund. You have to factor in spending habits, average life expectancy, and health conditions while calculating your retirement savings needs. An ideal retirement plan is based on three factors:

Life expectancy: In India, the general trend indicates increased life expectancy. While this is good news, living longer also means that you need to plan more carefully to ensure that you can live comfortably off your savings for the rest of your post-retirement life. This has to factor in increased health problems that are common with old age, assisted living facilities, home nurse and other medical expenses.
Inflation: In a developing country like India, inflation tends to be higher. Also, the pandemic has shown us that global events spurring market volatility are only going to get more common. Hence, while making retirement plans, you must keep in mind that the real cost of goods and services will rise in the future.

Choose investments based on your “horizon.”

Your investment horizon is the amount of time you need to keep your investment portfolio before spending it. For instance, if you’re 40 years old and plan to quit working and live solely on investment income when you’re 65, you have a 25-year investment horizon. This is important to consider because, in general, the longer your horizon the more aggressive you can afford to be.

If you have at least 10 years to go before needing to tap your investments for regular income, you have plenty of time to recover from temporary market downturns along the way. But as you get closer to retirement, it’s wise to shift more of your investments into less risky investments so you preserve your wealth.

In general, stocks are the riskiest investments because their value can change daily; however, they offer the highest returns. Bonds are less risky because they offer a fixed, but lower return. And cash or cash equivalents, such as money market funds, give you the lowest, but safest returns.

I recommend that you start by figuring out how much stock you should own. Here’s an easy shortcut: Subtract your age from 100 and use that number as the percentage of stock funds to own in your retirement portfolio.

For example, if you’re 40, you might consider holding 60% of your portfolio in stocks. If you tend to be more aggressive, subtract your age from 110 instead, which would indicate 70% for stocks. But this is just a rough guideline that you may decide to change.You might allocate your stock percentage to a variety of stock funds or put it all into one stock fund. The remaining amount would be in other asset classes such as bonds and cash.

Define Your Investment Budget

Budgeting may get a bad rap, and maybe not everyone should have one. But in reality, if you want to become an investor, having a budget can be extremely helpful in saving money to use for investing. When making your budget, be sure to include plenty of funds for investing.

Now, there are plenty of methods for setting up and maintaining a budget. It doesn’t have to be rocket science. You can use a spreadsheet and just paper and a pen. Or you can use one of the helpful online services that do the heavy lifting for you. Personal Capital has free budgeting and personal finance software that we particularly like. It’s also a robo advisor, so you can start investing right away at the same time!

It’s also a good idea to think about saving money on the side to invest eventually. You can easily put extra money into a cash account like Wealthfront, where you can earn interest on your savings.

Digital Gold

While this might seem like an oxymoron considering how gold is always seen as a physical asset to be possessed personally. The concept of digital gold is fast catching up. Digital gold is essentially an online product that allows you to own gold without a bank locker or a safe to store it.

This means that a seller keeps an equivalent weight of physical gold in a safe/vault. The advantage here is that there are no minimum limits, so you can even buy gold worth INR 500 or INR 1,000. This can be done in the following ways.

Gold mutual funds and gold exchange-traded funds (EFTs) are an excellent alternative to physical gold.
You can also invest in digital gold as it is; 24K that is 99.9% pure gold with no wastage or making charges.
You can visit any of the platforms that offer digital gold investments such as GPay, Paytm, Amazon, HDFC Securities, among others.

Conclusion

Investing is your path to riches. The more you put in, the greater the reward. Not only that but by investing, you are keeping your money in circulation, which is what keeps the entire economy moving. However, it can be costly to get into the market if you don’t start early enough.