10/7/2021 0 Comments Why Invest While We Are Young?When it comes to having the flexibility and freedom to live the life you’ve always wanted, Millennials and young generations before us, have always had the opportunity to take advantage of time and it’s ability to build to wealth. Young investors have the flexibility and time to study investing and learn from their successes and failures. Since investing has a fairly lengthy learning curve, young adults are at an advantage because they have years to study the markets and refine their investing strategies. Waiting to invest could be the biggest mistake many young professionals make early in their careers. This article will explore the importance of investing when you’re young, the power of compound interest, and a case study supporting my claims.
What is Investment and Why it is Important? (Before investing, we should have studied or have known why we invest and its importance first) Investing is how you take charge of your financial security. It allows you to grow your wealth but also generate an additional income stream if needed ahead of retirement. Various investments such as stocks, ETFs, bonds, or real estate will provide either growth or income but in some cases both. Investing is important since it’s impossible to maintain a rich lifestyle if you’re not investing enough on the side to eventually allow you to step away from your high paying job and have the flexibility to do as you please. It’s a necessity to establish other forms of income in order to become financially independent from your job. TYPES OF INVESTMENT Think of the various types of investments as tools that can help you achieve your financial goals. Here are different types of investments: Stocks - When you invest in a stock, you become one of the owners of a corporation. Stocks represent ownership shares, also known as equity shares. Bonds - When you invest in bonds and bond mutual funds, you face the risk that your investment might lose money, especially if you bought an individual bond and want or need to sell it before it matures Mutual Funds and ETFs - publicly offered funds such as mutual funds, exchange-traded funds, closed-end funds and unit investment trusts must be registered with the Securities and Exchange Commission (SEC) as investment companies. Private investment funds (often called hedge funds) are often exempt from registration. Bank Products - Banks and credit unions can provide a safe and convenient way to accumulate savings—and some banks offer services that can help you manage your money. Options - Options are contracts that give the purchaser the right, but not the obligation, to buy or sell a security, such as a stock or exchange-traded fund, at a fixed price within a specific period of time. Annuities - An annuity is a contract between you and an insurance company in which the company promises to make periodic payments to you, starting immediately or at some future time. You buy an annuity either with a single payment or a series of payments called premiums. Retirement - Once you retire, the way you manage your income can mean the difference between living comfortably in retirement and running short of money down the road. Whether you are in retirement or still saving for it, there are actions you can take now to manage retirement income. Saving for Education - Education funding begins with saving. While college and other educational costs continue to rise, the good news is that there are many smart, tax-advantaged ways to save for education. We'll help you navigate your options, and provide tips and tools along the way. Alternative and Complex Products - Investment products abound that offer alternatives to conventional stock and bond investments. These products are sometimes referred to as structured products or non-conventional investments. Initial Coin Offerings and Cryptocurrencies - Digital assets like cryptocurrencies and ICOs continue to evolve and spark interest from Main Street investors. With billions of dollars raised in ICO financings and over a thousand different cryptocurrencies currently available, these rapidly changing markets are tempting for investors. Commodity Futures - Commodity futures contracts are agreements to buy or sell a specific quantity of a commodity at a specified price on a particular date in the future. Commodities include metals, oil, grains and animal products, as well as financial instruments and currencies. Security Futures - Security futures involve a high degree of risk and are not suitable for all investors. As with any investment, if you don't understand it, you shouldn't buy it. Insurance - Life insurance products are often a part of an overall financial plan. They come in various forms, including term life, whole life and universal life policies. There also are variations on these variable life insurance and variable universal life insurance which are considered securities and must be registered with the Securities and Exchange Commission (SEC). How to Invest in Real Estate 1. Buy REITs (real estate investment trusts) REITs allow you to invest in real estate without the physical real estate. Often compared to mutual funds, they're companies that own commercial real estate such as office buildings, retail spaces, apartments and hotels. REITs tend to pay high dividends, which makes them a common investment in retirement. Investors who don’t need or want the regular income can automatically reinvest those dividends to grow their investment further. 2. Use an online real estate investing platform If you’re familiar with companies such as Prosper and LendingClub — which connect borrowers to investors willing to lend them money for various personal needs, such as a wedding or home renovation — you’ll understand online real estate investing. 3. Think about investing in rental properties Tiffany Alexy didn’t intend to become a real estate investor when she bought her first rental property at age 21. Then a college senior in Raleigh, North Carolina, she planned to attend grad school locally and figured buying would be better than renting. Alexy entered the market using a strategy sometimes called house hacking, a term coined by BiggerPockets, an online resource for real estate investors. It essentially means you’re occupying your investment property, either by renting out rooms, as Alexy did, or by renting out units in a multi-unit building. David Meyer, vice president of growth and marketing at the site, says house hacking lets investors buy a property with up to four units and still qualify for a residential loan. 4. Consider flipping investment properties This is HGTV come to life: You invest in an underpriced home in need of a little love, renovate it as inexpensively as possible and then resell it for a profit. Called house flipping, the strategy is a wee bit harder than it looks on TV. 5. Rent out a room Finally, to dip the very edge of your toe in the real estate waters, you could rent part of your home via a site like Airbnb. It’s house hacking for the commitment-phobe: You don’t have to take on a long-term tenant, potential renters are at least somewhat prescreened by Airbnb, and the company’s host guarantee provides protection against damages. Renting out a room feels a lot more accessible than the fancy concept of real estate investing. If you've got a spare room, you can rent it.
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