Investing and Saving
Investing and saving contributes to more than 90% of people’s ability to retire. So unless you plan on working for the rest of your life, start investing and saving. The sooner you start, the better. The laws of compounding work to your benefit, the sooner you start investing and saving.
When investing, remember the saying, “Don’t put all your eggs in one basket.” It is very important to diversify your investments. Securities such as mutual funds, stocks and bonds are relatively good long-term investments to put your money into.
Individual Retirement Accounts (IRAs) are another good way to save and invest for the long haul.
Remember that, when investing, you’re in it for the long-term benefits. If there was a guaranteed investment that would make you tons of quick money, everyone would be investing in it. The closest thing you’ll get to seeing quick returns on your investments is to invest in yourself. Invest in your health and constantly growing and bettering yourself with valuable knowledge. Your brain is your most valuable tool — invest in upgrading it. Learn to live off about 85% of your income. That way, you can invest 10% into savings and 5% into bettering yourself so that your income can continue to rise every year.
When considering making a costly purchase, learn not to take money from your 10% reserve. You need to learn how to save for short-term purchases and practice delayed gratification.
If you have something specific that you’re saving for — perhaps a vacation or an expensive material object — you should calculate how much the vacation or item will cost you. Then figure out how soon you plan on purchasing it. Divide the cost by the amount of days until you plan on purchasing it. The number you get will be the amount of money you need to save per day in order to pay for your item (vacation, car, jewelry, etc.).
For example: You want to go on a vacation in the summer, say June 25, which is exactly 60 days away from today. You calculate the cost of your entire vacation to be around $2,250. The equation would look like this: $2250 ÷ 60 (days) = $37.50/day.
That means that you will have to save $37.50 a day, for 60 days, to pay for your vacation. Then figure out where you can cut costs and save money to reach this goal. Remember, the secret is to not have to take money out of your savings. That is your reserve — for long-term and more meaningful purposes — not short-term gratification.
Random Fact
Cracking your joints or bones does not cause arthritis. All you’re doing is popping air pockets.
