Advertising
Advertising

10 Small Investments Everyone Should Make That Are Rewarding And Fun

10 Small Investments Everyone Should Make That Are Rewarding And Fun

If you are a beginner investor, the thought of parting with your money for an investment option is rather hard; huge number of funds and investment offers can be confusing. You might be looking and searching for online lottery games to earn some extra money or might be exploiting your smartphone to look for entertaining and rewarding mobile applications. To help you out, we have selected some ideas to use as starting points that can make you money and with the help of these investment ideas, the entire process of investing will get easier for beginners.

Of course, which investment option is best for you depend on your individual situations because each of these investment ideas has its own vital principles and strategies that you must know. So, before making any investment, do your own research, choose your option carefully and hopefully you will make your own good investing luck.

1. Real Estate

If you are looking for long-term protection of your investment against the risks of high inflation in the future, then you will find better value in real estate. Even in developing nations, this is the only sector that thrives and flourishes thus making real estate an excellent investment option.

Advertising

2. Gold

Whether in the form of jewelry or in bars, gold has always been a good idea to invest. Unlike most of the other investment opportunities, we have always witnessed that gold’s value is continually on the rise as the dollar keeps depreciating in value.

3. Forex

When comes to compare best returns in forms of investment, Forex trading investment yields the best returns.  In recent years, Forex trading has emerged as one the best small investment options because of its simplicity. Even a student can start Forex trading with a small capital. You just need a sound strategy to make a handsome amount of money in Forex trading.

4. Insurance

Insurance can be used as an investment vehicle. Taking care of yourself in cases of emergency or when you grow old and retire is essential – and a wise investment.

Advertising

5. Employee Funds

Nowadays most of the organizations offer “safe harbor” or other equivalent retirement plans. In safe harbor contribution programs, the amount paid by your company is vested to you entirely; that means, even if want to resign from your job; the funds will remain in your name.

6. Treasury Bonds

Treasury Bonds are also considered as a safe small investment option, because these are issued by the government. These treasury bonds can be bought for as low as a thousand dollars each and they profit upwards of 5 percent after maturing.

7. Stock Market

As the stock market heaves to new heights, average investors who missed a lot of the stock market rise have been rushing to jump on board. If you want a bit of excitement while investing at the same time, then you should try experimenting in the stock market. Do your research on the risks involved in trading stocks so that you do not lose all your money.

Advertising

8. Mutual Funds

If you want to choose a simple and convenient way for investment, then mutual funds are the best route. Because your fund manager will manage them, you will not get worried about diversifying individual investments yourself or doing your own record keeping.  You just need to choose a specific type of fund and then direct them to your fund manager and he will do the rest.

9. Penny Stocks

If you want an investment option that can make you a lot of money in just hours, just like winning a lottery, try trading penny stocks. These are unpredictable stocks that are very cheap and they can double or triple the value within a couple of hours.

10. Bank Deposits

It’s another small investment option that guarantees you a return on what you put in your account. To get the best deal, compare term deposit rates with other banks because they can vary significantly. Most banks offer substantial returns on fixed deposits, making that a worthwhile investment.

Advertising

There are various investment options for beginners which can maximize the returns. It depends on your financial goals, fixed or regular, the investment period and your current financial situation. Keeping these things in mind, a beginner can choose the best investment option.

Featured photo credit: businessinsider.com via static4.businessinsider.com

More by this author

Tayyab Babar

Tayyab is a PR/Marketing consultant. He writes about work, productivity and tech tips at Lifehack.

10 Traits of Sucessful Heroic Leaders 25 Signs That You’re A Mentally Strong Person 10 Astonishing Benefits of Marmite That Will Turn Your Hatred Into Love 5 Fun Ways to Make Money Online That You Should Try 4 Crucial Startup Mistakes That Can Kill Your Business: How You Can Avoid

Trending in Money

1 How to Set Financial Goals and Actually Meet Them 2 25 Killer Sites For Free Online Education 3 10 Recession-Proof Debt Consolidation Tips 4 The Definitive Guide to Get out of Debt Fast (and Forever) 5 25 Easy Tips on How to Save Money Fast

Read Next

Advertising
Advertising
Advertising

Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

Advertising

4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

Advertising

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

Advertising

5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

Advertising

3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

    Read Next