I may be a goblin, but I know a thing or two about managing money. Investing is an excellent way to make passive income. It allows you to save for the future and create a nest egg that will give you control of your own future. Of course, there are risks, but a bit of prudence can help you avoid many of them.
An important rule of motivated investing is avoiding investments you can’t explain to Granny Goblin. If you’re trying to convince yourself that putting all your money in Netflix stock is a good decision, run it by someone you trust and see what they think. This is the best way to avoid common pitfalls and keep your money in wise investments.
Here are some of the most common reasons to invest your money:
To Create a Side Monthly Income
If you’re like me and you have people dependent on you, it never hurts to have some extra money around. The key is to generate passive income that requires little work from you. A great way to start is by signing up for Internet tracking programs like Smart Panel or Digital Reflection (need to go back and find these slug codes)
If you are really serious and want to pocket stacks on stacks instead of $10’s and $20’s, you should consider investing in dividend stocks. This means you buy publicly traded stocks from companies that pay you either monthly, quarterly, or yearly just for keeping your money invested with them. Your best bet is to follow the advice of Warren Buffett and buy companies you are familiar with, like Apple or Coca-Cola.
To Gain Financial Freedom
This is easily one of the main reasons that people like you choose to invest. Financial freedom is all about making more money you can spend. Sure, we would all like to have Brewster’s Millions, but getting ahead of the game requires some diligence and planning.
The key to long-term investing is utilizing something called a Dividend ReInvestment Program (DRIP). Basically, when the company you are invested in pays out a dividend, you are able to buy fractions of shares immediately. This is an important factor in compounding growth rates. Of course, you may need part of the dividend income to meet monthly expenses. Whenever possible, you should put the money you receive in dividends back into shares.
Property investors can also benefit from utilizing positive cash flow. A simple rule of investing in real estate is finding a property that has rental income that is more than the mortgage on that property. This gives you the opportunity to add to your savings each month.
To Build Financial Security for the Future
You never know what the future may hold. Nobody likes to prepare for tragedy, but having a proper financial plan can make sure your family is taken care of. You never know when that day will come when your company lays you off or something happens to a loved one.
Most types of investments work for this. You could opt for dividend stocks and put the money back into them for the future. Another option is to opt for regular stocks that you buy and sell when prices are low and high respectively. When you get to a tricky point in life, you can sell off your more liquid positions.
To Create Diverse Income Streams
Papa Gilbert always told me not to put all my eggs in one basket. I just wish I had realized at the time he didn’t tell me this because he just wanted some of my eggs. Investing is a mindset that many people fail at because they never diversify their income.
Quite simply, you MUST invest in different areas. Even within the stock market, you have many different areas and sectors to invest in. The key is diversification. Make sure you put some money into stocks, some into property, and even consider peer-to-peer lending.
In conclusion, motivated investing is understanding why you want to invest your money. You need to know what you want to get out of it before you begin. Following this rule is crucial to getting you on the path to meeting all your financial goals.