When it comes to investing there is no dearth of advice online or offline from blogs or Twitter threads and friends to relatives, everyone seems to have an opinion on how you should invest your money. However, there is no standard cookie-cutter approach that can lead you to instantaneous wealth. Investing is an art and a science, and it is important to develop a the financial literacy needed before embarking on your financial journey. Here are some things you should know.
Why Should You Consider Investing?
Apart from drawing a regular salary, there are many other supplementary ways to make money. Investing is one of those ways; in fact, it is one of the best ways to help your money grow and make it work hard for you. Smart investing can become akin to a second source of income and eventually help you to tide over difficult times, save on taxes and help build a robust post-retirement fund.
5 Ways to Invest Your Money
Below are some of the most prominent tools and approaches that can help you to invest money wisely.
The Cookie Jar Method
Often used only in the context of blue-collar workers, the cookie jar method is an effective method for financial planning. In essence, it is a method of investing that allows you to save and invest in multiple buckets that are earmarked for different purposes.
Think of it from the perspective of a child saving up enough pennies in a jar from their pocket money to buy their favorite chocolate. An adult version of this would mean using high yielding online savings accounts or fixed deposits that are reserved for specific expenses. This seemingly child-like method is surprisingly effective as a first step towards allocation of funds and the management of expenses.
Consider Algorithm-based Advisors
Taking financial advice from algorithm-based apps and online platforms that are devoid of any human element may seem odd and unconvincing at first. However, robo-advisors use algorithms to draw-up detailed profiles of investors and then suggest personalized investment solutions. With the help of technologies such as artificial intelligence and deep learning, robo-advisors work to understand and eventually predict investor’s financial goals, preferences and determine risk.
Automated investment advice is a field that will gradually disrupt and improve the financial advisory space due to the high level of personalisation it offers. Also, they aren’t complicated to use and even novices can invest with the help of robo-advisors. They come in the form of inexpensive and user-friendly apps, and require slightly lower investment minimums than traditional investment firms. It is advisable to invest your money in a highly-diversified and low-cost portfolio consisting of good stocks and bonds.</…….
Source: https://www.forbes.com/advisor/in/investing/the-building-blocks-of-how-to-invest-your-money/