I’m sure I am not the first one to tell you how important investing for your future is, but it’s not always so easy to know where to start. There are so many options, such as the Sharemarket, Kiwisaver, investment properties, term deposits etc. but its understanding what is going to work for you that matters! Everyone is different when it comes to handling investments. Here are a few point to consider if you want your money to MAKE YOU MONEY!
So what do I need to do BEFORE I start investing?
- Firstly, pay of as much debt as you possibly can! Things like credit cards, personal loans, Qcards can have a big impact as to how much you can save to put towards an investment. The less small personal debt you have, the better!
- Live on less than you make. For some this is harder than it sounds. Realistically, you can NOT become successful if you live pay check to pay check. You need to learn to budget certain amount for different expenses. An easy way of doing this is having multiple bank accounts, each allocated to different things like spending, car, savings, power bill etc. Work out how much per week you spend on each and allocate that amount to its respective accounts, I can tell you now, you do this, saving just became a whole lot easier!
- Allocate yourself an ‘Emergency fund’. We all have to unexpected bills that come with no warning, but if you are prepared, it means you can carry on without any disruption to your savings and investment goals! Try to have in this account 4-6 weeks’ worth of income at any one time.
- If you have trouble when it comes to spending too much money, why don’t you try taking out a certain amount each week in CASH and only use that for your spending? It helps you keep track of how much you have allocated yourself to spend for that week!
Investing can be a very tricky thing to jump into if you haven’t done your research. Some investments have an element of ‘risk’ to them. Basically, the higher the return on your investment, the higher the risk is.
Two Types of investments if you have NO CLUE as to what you are doing.
A term deposit ensures your money will earn interest at a fixed rate, for a fixed term. There’s little to no chance of losing your money, so it’s a good option for cautious savers. It’s low maintenance. One disadvantage is that once you lock your cash away in a term deposit, there’s not a lot you can do with it until the term is up.
Since your money is in an investment fund, it can go up and down in value, so you can lose money, unlike term deposits. Because of this, you do have a slightly higher return on investment. To be honest, because you, your employer as WELL as the government are putting money into your KiwiSaver, it will be VERY hard to lose everything as you are not just banking on the interest to make you money.
If you are looking to invest larger amounts of money, but wanting to go down the route of shares, bonds etc instead of your more secure term deposits, savings accounts, would be to meet in person with a Financial Advisor. They will be able to learn about your current situation and what your goals are and help you tailor the perfect plan to help start you on the right path to investment. It is very important to get the RIGHT advise the first time. Nothing worse than losing your hard earned money just because you were not completely aware of all advantages and disadvantages of certain types of investments right?