We always hear that we have to invest, what does this exactly mean?
From my own understanding investing is committing resources in an attempt to gain positive expectations or returns. The returns depend on the level of risk the investment has. Thus, a higher risk investment offers higher returns.
How best do we start investing?
It does not really matter how much one is making but they are a few habits we have to get used to starting managing our money so that it keeps on multiplying. My number one rule is to pay yourself first when you receive your income. I advise 10% or less and keep this in a savings account. This I call it investing in yourself and rewarding yourself.
My number two rule is to invest in your projects, set aside a certain percentage for that business you are hoping to start, or if you already have something reinvest in that business for business growth. Always try to invest in long term projects so that you can realize the higher returns. However, this also depends on the risk attitude one is.
With the recession we mainly facing in this part of the world l live, it’s tricky to figure out which is the right investment one can embark on. They are a lot of investments out there but will only talk of the real estate, personally, that’s what l prefer as l have seen the rewards in it.
How do we invest in real estate?
If pockets permit it is a good idea to invest in property. Which you can use to earn extra income through renting out or using it as an Air BnB. The simple math is that the property must be able to pay itself if that is bought using a mortgage and have some extra income from it which can be used to build other investment portfolios.
Another way to invest in real estate is by buying old buildings and renovate and resell at a higher price. Careful consideration needs to be taken on this type of investing that you have someone who has an understanding of building so that you can have a good cost estimate before buying the property.
Below will list some other investments to be considered as well:
- Mutual funds
- Index funds
- Real estate investment trust
The big step to start investing is how to start doing it and exercising it. Before we start l advice that we also start investing in ourselves. Through reading investment books so as to have that basic understanding and learning how to multiply the wealth we already have.
Author: Talent T Manyonga