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The Best Investment Portfolio for 2016 and Beyond

The Best Investment Portfolio for 2016 and Beyond

Simply put, there is a lot to know and a lot to learn about investing. There are dozens of different kinds of investment vehicles and countless options among those for investing your money. Before you start putting your hard-earned money away, it’s best that you understand the basics of where it’s going and your best options for investing in 2016.

The Principles of Investing

Before looking at specific types of investments, let’s review some of the basics of investing. The very, very simple summary is that you give away some money, wait, and receive more money back after a certain time.

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It’s also helpful to understand what investing is not. For one, it’s not a way to make money overnight (in most cases). It’s not something to put all of your eggs in–all investments involve a degree of risk. And it’s not something worth putting money into if you have high-interest debt obligations to pay off because the chances are you’ll just end up accumulating more debt than returns on your investments.

That said, if you’re able, the sooner you invest, the better. It’s a snowball effect: The sooner that you put your money into something that will make you money, the sooner you make that money, which you can put back into investing. Rinse and repeat. The best time to invest was yesterday, and the second-best time to invest is now.

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Finally, you’ll want a diverse portfolio. That is, it’s best if your investments are split among different vehicles. If you’re all set to invest, make sure you have the following investments in your portfolio this year.

Mutual Funds

If you’re just starting out, mutual funds are the best way to grow your money. While it will take some time to see a return on this investment, they’re low-risk and almost a guaranteed profit. A mutual fund works by pooling together money from multiple investors who share a common goal and investing the money accordingly. Here are the best mutual funds you can invest in in 2016:

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  • Vanguard 500 Index Fund: Based on the S&P 500, this fund has had its slight ups and downs. But taking a longer-term look at the fund shows its almost doubled in value over the past five years, and it looks to continue to grow. It’s basically a guaranteed profit.
  • Vanguard Health Care: This fund is split among different health sectors such as biotech and healthcare technology. While Vanguard labels this fund as high risk and high reward, an aging Baby Boomer population is going to put these services in high demand.

Stocks

A stock is a portion of a company that you buy into, and as the company does well, demand for the stock rises, meaning your stock increases in value. The best stock investments you can make are in companies you expect to continue to do well. But, if you want to make a greater profit (with a higher degree of risk), you’d do better to choose companies that you expect to grow in the future. Here are your best stock investments for 2016:

  • Apple (AAPL): Of course, the best time to buy Apple was years ago. But don’t be fooled: this is still a good stock. The past year has seen the stock fall, meaning that it’s cheaper than it has been in two years. With a broadening ecosystem and a new headquarters, there’s no doubt that Apple’s stock will rise again.
  • Tesla (TSLA): The electric car company basically has the rapidly-growing industry cornered and is set to release its first consumer electric car next year. It’s a disruptor on the ground floor, just like Apple (AAPL) was, and it’s just announced its iPhone.

Commodities

Commodities are fairly easier to understand, as their value comes from physical objects. Better yet, they’re always in demand. Unlike a stock, you never have to worry about a commodity going out of business or making bad press. Here are three of the best commodity investments you can make:

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  • Alternative energies: If you’re interested in short-term investments, you might look instead at investing in crude oil. But taking a long-term view of energy shows that green and renewable energies like solar, nuclear, and natural gases are the way of the future. Their demand will increase this decade, and surely in the decades following.
  • Lithium: This precious metal isn’t as popular as gold, silver, or copper, but it’s due for a huge surge in demand, as it’s one of the main materials used in batteries. With a car industry that will see a greater reliance on batteries in the future, lithium will be coming out on top.

Real Estate

In simple terms, your investment comes in the form of buying a property, such as a house, an apartment, or a condo. While you’re responsible for paying the mortgage on this property, as well as for its upkeep and repairs, you can make money by renting out the property, or by “flipping” it by making renovations and selling it for more than you paid.

Your safest investment would be to buy a property that’s in an area of high-demand. With that in mind, consider these options for 2016:

  • College apartments and houses: There’s always an influx of students every year, and with tuition rising, across the board, more students will be looking for cheaper off-campus rentals than living in a dorm.
  • Real estate in trending cities: Homes in cities such as Detroit, which is on the verge of economic recovery, and Austin, which constantly ranks as an increasingly popular city for millennials, will no doubt be in higher demand in the coming future.

These are just a few of your investment options, but you would certainly do worse putting your money elsewhere. Look at these investments as opportunities to learn more about how investments work, and soon enough, you’ll be on to more complex (and hopefully higher earning) investments.

Featured photo credit: http://www.lifehack.org/ via lifehack.org

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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