Investing your money is a nifty way to earn some extra passive income. It is called ‘passive’ because you can bring in cash though you aren’t working. In a manner of saying, you can earn even while you sleep.
Investments are also useful for beating inflation. Your money loses value over time if it just stays in the bank, but if you invest it, you can gain profits as time passes.
Are you thinking about investing? Take a look at these 3 considerations first.
How to plan for investing
- How much money are you willing to lose?
Before you get discouraged, the point of this is not that your money will always disappear. Instead, think of this rule of thumb: invest only up to an amount you are willing to lose.
Any form of investing carries risk, so you must come to terms with the possibility that your investments may fail, and you may never recover the money you put in. Knowing that risk, you can more wisely assess the amount you will invest.
- What are your goals?
What do you want to do with the earnings from your investments? Do you intend to buy a car? A house? Create a fund for your child’s education? Retirement?
Depending on the goals you set, they may be short-term or long-term. Travel funds and financing a home or car are often short-lived and require investments with fast returns.
Retirement and education funds, on the other hand, are more long-term, and they can benefit from investments that benefit from growth over time.
- Choose your assets
There are many kinds, from stock market investment to real estate. The assets you choose will depend on both your goals and the amount you are willing to invest.
Given the diversity of options, it’s wise to speak to a financial planner to help you determine the best asset structure for you. If you are looking to secure your future and need some help making a start, speak to the wealth advisors at Precept today.
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
Please see our Financial Services Guide for more information.
Precept Financial Services Pty Ltd (ACN 140 538 147) as trustee for SF Unit Trust trading as Precept Financial Services is an authorised representative of Charter Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee No. 234665