The Secret of Investing in 2021
When it comes to investing, many people are always confused about what to do, how to do it and which step to take. This is the reason why people rarely take the step. You wouldn’t want to take action that will not yield a productive result; that is entirely understandable. At one point in time, everyone needs a guide or a little help. That is why I am here; I will be discussing and answering all your questions in detail. I will break down everything about investing and make it easy for you to make decisions. I will also be sharing my investment strategy with you. At the end of our discussion, I promise you that you will have a more in-depth understanding of investment, you will be able to make better choices when it comes to Investment.
Hello readers, you are welcome to another edition of my regular bog. You will benefit a lot from it if you can read it till the end. You may be interested in checking out other related blogs like “15 Investments that Will Make You Wealthy in 2021“. And if you are yet to subscribe to newsletter, please do so now!
If you have money, and you don’t know what to do, put it into a hundred savings accounts. Before you ask if placing the money in a savings account is an Investment, it is not, but that is a way to start since you don’t know how to go about your investment yet. Having your money in a savings account is way better than putting your money under the mattress or hiding it in your wallet; what do you gain by doing that? Nothing! Your money should not also be in the bank that is not earning you enough interest. Some people have their money in the bank, and it is giving them 0% or 0.05% interest rate. Let’s now assume that Inflation sets in; if you are not keeping up with inflation, your money will be reduced in value. You are not going to grow your wealth by putting it in the bank or hiding in your room. Those who are strikingly rich that is not what they do; they don’t hide their money. You hiding your cash will not increase it.
Let’s take, for example, if you have your money, and you don’t know how to go about your investment, you can save it in a high-interest account, it will be a better decision for you, do you know why? This is because it keeps up with inflation. Some high-interest savings accounts now have up to a 2% interest rate. A high-interest savings account provides flexibility for your funds. There is no need for you to be worried about what happens when an emergency occurs, and your money is saved up because a high-interest savings account is an excellent way for you to set aside rainy days funds for the days that you will not be earning as much as you do presently. Let’s discuss investment more in-depth, but before I begin, I will like to tell you to make sure that, whichever form of investment you are going with, endeavour you have a comprehensive understanding of what is going on about the investment. There are so many investment opportunities that are existing. We have stock, real estate, mutual funds and bonds; don’t just go about investing your life savings into something you have no appropriate knowledge about. Most people get confused when it is time to discuss mutual funds, index funds and ETFs. In this discussion, I will probably differentiate them, but first of all, let’s take the ride by discussing the stock market. By the time you are done reading this blog, you will have a piece of explicit knowledge about them.
Just as the name implies, what happens in the stock market is the sale and purchase of stock and bonds. Through initial public offering (IPO) /or issuing of new shares, companies can raise funds or capital for their businesses. Some companies may want to execute a new project, and they need funding; they raise their funds by making the company’s share available on the exchange market. This gives room to the company to grow and develop.
Companies don’t just decide to list their shares in the stock market. Companies that are publicly listed on the exchange market must have conformed to reporting standards set by the regulating bodies. Among other rules is the rule that they can publicly report their financial statements and earnings to their shareholders.
You need a brokerage account before you can buy stock in the stock market. Your brokerage account is a security account that holds your financial assets on your behalf. Securities accounts are of different types, such as share account, cash account, margin account, and options accounts. Your brokerage account is as simple as just the same way you run your bank account. Examples of stock exchanges available in the stock market include; New York stock exchange (NYSE), NASDAQ, and many others.
You don’t have to wait till you have all the money in the world before you start making your investment. You can begin with £1000. Investment is divided into two; active and passive investing. Those investors who choose passive investing have a long-term holding in mind. You will never see a passive investor buying and selling stocks regularly; what they do is that they limit the number of the securities they trade in a given time. Passive investors use a strategy of “buy” and “hold,” the investors are trying to minimize their risk by using this specific strategy. They see this pathway as a budget-friendly way to participate in the stock market. To be a successful passive investor, you need to learn to keep your calm in the stock market by refusing to take desperate and haste decisions. Successful passive investors are disciplined, and they have a long-term vision.
Active investors use a strategy of trading in the market regularly, and they are ever ready to trade; they use what is called a “hands-on approach” strategy. They trade in the stock market based on their daily fundamental company research, they analyze industries, and they are ready to take action based on their judgement. To manage active funds, you will need to dedicate time to finding pieces of information. You must be able to read the stock market for you to succeed in the actions or steps that you take.
I will like to use Coca-Cola stock as a case study of what investment is about, let’s assume you want to buy a stock, and Coca-Cola company is of interest to you; let’s say you purchase the stock for $50, this means that you now own $50 worth of shares in Coca-Cola Company. Most people like to invest in individual stocks; when you invest in an individual stock, you are purchasing ownership in the company. People have various reasons why they invest, and they also have a reason for the choice of investment options they make. Regarding the example using Coca-Cola, you might have calculated your risk and benefits before investing. Before buying a share in the company for $50, you expect the stock price to increase far more than the present $50 to maybe something like $80. Therefore, you think it’s going to increase over time, and so you invest your money into it.
If you are not clear on what to do, you can go ahead and pick up a couple of books on investment. Read and digest as many as possible till you get the answer to the questions in your mind. When you are ready to start investing, mainly because you are a beginner, you are advised to start small. Please, don’t take all the money you have probably used your life to save and dump it in one investment; anything can happen, it is better to be safe, you can decide to start small. You can choose to begin with a small amount; with time, you will increase it. As time goes on, you will learn more, you will make mistakes, and you will learn from them.
You are advised to practice diversification while investing. If you can invest your money into an index fund, mutual fund or maybe an ETF that contains a thousand different stocks, and in a thousand other companies, if one company in that thousand company fails, you don’t get to lose all you have. You will still have something to fall back on at the end. The whole idea here is that you are trying to smooth out your investments by investing in many stocks.
Real Estate Investment
The reason most people don’t invest in real estate is that they think you need to have all the money in the world before you can get started; this is all a misconception. You don’t need to have your bank account full before you begin. You don’t need a lot of starting capital. Many successful real estate investors began with poor credit, but they were committed. When discussing real estate investment, there are two ways through which you can generate cash.
(a). You can generate passive income by buying and holding real estate properties.
(b). You can generate an active income by flipping contracts, doing renovations or putting together property development deals.
How does real estate investment work?
Real Estate Investment operates on a positive cash flow concept. This means that your income has to be more than your expenses. Either you are considering long-term residential rentals or short-term rentals, it would be best to work with this concept.
One of the most straightforward ways to make money in real estate is to leverage long-term buy and hold residential rentals. Think about it; people will always need a place to live in, which means you getting involved in residential rental properties will bring you money. There are several methods for you to utilize when you are interested in real estate investment. Take a significant step, begin by buying houses, apartments, renting them out, and gradually you will become a landlord. You can check for any local Meetup in your area; it doesn’t matter where you are. There are undoubtedly local meetups where investors meet and discuss. This is one of the proven ways to grow your wealth.
Investing in your business
Though this is more of a personal decision, you can decide to start up your business and invest in it. I think this has tremendous potential in terms of return on investment. People usually complain that building a business venture takes time, and the reply I usually give them is, doesn’t stock investment also take time to build wealth? The same goes for investing in real estate. Creating a business venture isn’t exceptional; it takes time, but it is worth it. Like myself, I started a cleaning business; though it wasn’t easy starting, I can say proudly that it was all worth the stress. I am the CEO and founder of FastKlean Company. The company has grown to be one of the most successful and dynamic cleaning companies in London, and we offer all kinds of professional cleaning. You can also go ahead and begin your business, invest in it, and it will be all worth it.
I hope you enjoyed this blog. Please do well to like and share with your friends and loved ones. In case of any comment or question, please feel free to do so in the comment section below, and most importantly, don’t forget to subscribe to my newsletter. You can also visit my Facebook page to avoid missing out on the great content on investment being discussed regularly, and you will also get an opportunity to see what I buy and sell.
Recommended books for further reading:
- Secrets Of The Millionaire Mind – Harv Eker
- Keys to Success – Napoleon Hill
- Money: Know More, Make More, Give More
- Intelligent Investor: The Definitive Book on Value Investing
- The Barefoot Investor: The Only Money Guide You’ll Ever Need