In this economy, saving cash is not the only option. Also, the inflated inflation makes it hard to sustain the value of cash. This is why people need to learn about financial planning especially about how to save & invest. By learning financial plan using the right strategies, people not only able to save money, they may also multiply it. However, for a beginner, they may have no idea how to make financial plan. Here are some beneficial tips for financial plan.
Why Saving and Investing Important
Some people are not aware about the importance of saving and investing their wealth into a more sustainable and long-term asset-saving. There are some importances why people need to have proper financial plan.
- Create Emergency Fund
People cannot predict what will happen in the future. Therefore, it is essential to prepare everything beforehand, including preparing emergency fund. Emergency fund is a saving where people money at least twelve times from their monthly incomes. The fund will be useful once something unexpected happen.
Be it a time where extra money is needed or unexpected incident happen, emergency fund can come to the rescue. In order to save emergency fund, someone needs to have financial planning where they save extra cash from their income for the emergency fund. The use of how to save & invest should be in the form of hot asset where it is easily accessible to use.
- Reduce Debt
Having debt is one of the most crucial decisions to choose. Sometimes it helps to accommodate the need of extra cash in a quick time, but it also creates long-term liability where debt needs to be reduced or even have no debt at all.
By having financial plan, someone is able to reduce and be free from debt. They will learn how to manage active and passive income, how to do monthly budgeting, and how to manage spending. Debt can only be paid when there is cash to pay. Therefore, when reducing debt, someone must focus on managing and increasing income.
- Create Long-Term Goals
Some people dream of financial freedom, some also dream of having their dream houses or jobs. These goals are achievable once someone is financially stable. By creating budgeting, future planning and investing to the right place, assets are not only in the form of cash but also some cold assets with prices always increase every year.
- Generate Dividend
The very benefit of investing is generating dividend. Dividend is the profit from investments when it goes green and positive. Increasing stock value will also increase the value of the money people are investing. Therefore, the amount of money they receive will be more than the amount of money they invest in the beginning.
How to Save and Invest Money
In order to create financial stability with investment for beginners, there are several ways to do it.
- Save Ten to Twenty Percent from Income
In order to save money and invest it later, try to save ten to twenty percent from income into your saving account. This will be the first step to create emergency fund. The percentage can actually vary depend on the amount income. The higher the income, the higher the saving it should be.
- Don’t Upgrade Lifestyle
One simple tip to save money is to stick to the old lifestyle. Even though people have upgraded their incomes into higher ones, upgrading lifestyle as well leaves no room for saving. If this is the case, there will be not enough saving to be allocated for investment. Thus, stick to simple and ordinary lifestyle instead of the luxury and sophisticated one.
- Choose The Right Investment Platform
There are many ways on how to save & invest, including online applications where people can easily download without complex procedure. For beginners, they need to choose the right investment instrument and calculate the risk. Only choose the low risk one for beginners. It may only produce low profit, however, it is safe to try for the first time.
After learning how to start saving and investing, there are also some fundamentals to learn when to start investing the money. Especially for beginners and the ones who will only start from small amount of investment.
Investment Fundamentals
There are several investment fundamentals to learn before dive deeper into money investment. Here’s is how to do it.
- Learning Risk Profile
The first thing to learn when trying to join investment is to learn the risk profile of each investment instruments. There are several instrument of investment such as bonds, stocks, cryptocurrency, or real estate. Try to compare each risk of each instrument, match it with the long-term goals and consult with expert if needed.
- Set Goals
Some people invest just to save the currency, some want to gain profit and how to save & invest from it. Make sure to decide which goals for long-term investments. If only to save the value of the money, just choose low profile or low risk investment instruments. However, if it is for profit in a relatively quick time, taking stocks can be an option. In addition, only set goals once people know the risk and the capital needed to join the kind of investment they prefer.
- Save Other Assets
Joining investment should not have taken all the assets people have. Some liquid assets and cash are still necessary for daily live. Therefore, some assets like gold, cash, and real-estate should still be on hand. This will be part of emergency fund to create saving for the future.
Conclusion
Learning how to save & invest tips is essential to make sure that both activities will not be liabilities but become profitable instead. For beginners, they only need to financial plan, budgeting, and reducing outcome to save money and start saving it into investment instruments. After doing it for years, someone will finally have the sense to choose medium to high profile risk. Hence, make sure to learn the basic way to start saving, after saving the money, they can use the money and start investing using the right instruments.