If you would like to make the most out of your investment and achieve financial freedom as soon as possible, it is important that you come up with an investment plan.
Most people around 30 are quick to jump on the bandwagon, spend out on cars and take on a mortgage, only to discover in their 40s that they have nothing to show for all the years they worked.
Below you will find a few tips every 30-something should know, who would like to achieve financial freedom by the time they retire.
Balance Risk and Returns
One of the things you should consider is the risks of the investment.
Whether you are thinking about properties or building up your stock market shares, you will have to know the risks that come with that type of investment.
You should try to balance the returns and the risks, and act with due diligence.
You have to find investments that will help you grow your wealth, but it is also important that you know the market and the trends, so you don’t end up losing money in the hope of growing it.
Manage Your Investments Using Technology
Technology has improved quite a lot in the past few years. It is important that you manage your investments and keep on top of them.
No matter if you are trading online, or just want to know the stock prices that are relevant to your 401K plan, you can do that using online tools.
Many investment and financial advisor companies now allow you to gain access to your portfolio performance report, so you can make adjustments when appropriate.
Always Compare Prices
You should also try and compare the prices of different accounts and products. It is crucial that you know exactly how much you have to pay the company to arrange your deal, and how much the investment firm takes.
After all, you don’t want to end up giving away free money, unless you really have to. Compare the prices of portfolio management, and choose a company that provides the best value for money.
Don’t Compromise Your Savings
You should try and keep hold of your money as long as you can.
Throwing your own money into a business idea might not be a smart choice, if you can apply for government funds. At the same time, you might be able to get a low cost home loan for investment property, instead of investing all your savings.
You might need the money for other things, and you don’t want to tie it up in a long term deal.
Easy Access Accounts for Emergencies
In some cases, you will need money right there and then. This means that you cannot tie up all your money, or you will have no other choice but to apply for a loan, which will cost you money in interest and other charges, not to mention damaging your credit rating.
You will need to diversify your investment portfolio, so you can liquidate your assets as and when needed. This will give you the flexibility you need when living the life of 30-somethings.
Do Your Research
Before getting started with investment, you will need to do your research and familiarize yourself with the various types of accounts.
One of the main reasons younger people make investment errors is that they are not aware of the terms and conditions, and they cannot understand the benefits and disadvantages of different types of investments.
It is crucial that you educate yourself. While financial planning is not a part of high school curriculum,
Take Everything with a Pinch of Salt
It is crucial that you don’t fall for the common investment hypes. If something seems too good to be true, it probably is, so you will have to act with due diligence.
Even if it is your best friend who recommends the opportunity, you will have to do your own homework.
Is it a proven scheme, and are people making money? Is it legal, and what is the catch?
Ask these questions and don’t forget to get in touch with people who can give you advice or those who have more experience.
Learn To Trust the Right People
You wouldn’t go to a builder with a headache or a tooth problem, so stop listening to investment advice from people who have no background in the industry.
You should learn to trust the right people and listen to those who want the best for you and have the knowledge.
There are many blogs out there that are set up by affiliates, and are promoting companies the blogger doesn’t really know anything about. They can still be convincing. Instead of trying to collect information from everywhere you can, choose the people who are qualified to advise you.
Cut the Commissions
Sometimes the direct and straight road is the best one to take.
You might be able to get the certainty that you are making the right financial decisions and trust your financial advisor with arranging the deal, but this will cost you a couple of hundred dollars in the least.
There are, however, some companies out there that get paid by the investment firm you sign up with, so you don’t have to pay commission out of your pockets.
Think Long Term
When you are in your 30s, you have to learn to think about your own future and your family’s.
Imagine your life 20-30 years from now, and plan for your retirement. If you don’t have a pension fund or savings account, it might be time to get one in place.
In case you already have kids, the sooner you set up a savings account or a college fund, the better you will be prepared for when they reach the age when they are ready to fly the nest and start off on their own.
Investments are important if you would like to achieve financial freedom. You have to find the right balance between diversity and security, and reduce the risks of financial deals by acting with due diligence.