Investment strategy is the key to wealth. Saving just isn’t enough.
Saving is a great life skill to develop.
As we saw in our article ‘Disciplined Saving Brings Rewards‘, developing a regular habitual savings pattern will lay a sound platform for future financial wealth, security and freedom, but savings alone will never be enough.
The peace of mind that savings can bring is amazing. Money in the bank is a great security blanket, and we encourage you to always have some readily available cash saved to guard against those inevitable “rainy days” that life throws in your face every now and then, but money in the bank doesn’t work hard enough for you.
Right now banks and building societies are offering savings investment rates of between 0.1% (yes that is zero point one) and 3% per annum. Term Deposit rates are little better. With those rates the real value of your money (what it can buy) will be lucky to keep pace with the rate of inflation. That’s hardly the strategy to build your wealth with.
So, how do you build your savings into real wealth?
The answer lies in your investment strategy and the ability to identify prudent investments.
You can start an investment portfolio with as little as $500 by buying a small parcel of shares on the share market. This is a wonderful opportunity and you really need to understand how powerful this can be. Shares generate income in the form of dividends and potential growth in the form of increased share prices.
With any opportunity, of course, comes risk and entering the share market blindly is a risky proposition. All too often, we hear of people entering the share market on a wing and a prayer, armed with nothing more than the recommendation of ‘a mate’ or a whisper from someone they met in the pub. These people lack an investment strategy that will bring them good finanical rewards. Investing in the share market is not like betting on horses. It takes education, guidance from the right people and a little practice.
With the right education and guidance you can effectively grow your nest egg investing in shares, but it’s crucial that you seek out the right information.
A little while ago, a friend of mine lamented that she had been a wonderful saver in her early years. Her parents had drummed into her the value of saving and she was able to save $10,000 but by her mid-twenties life’s challenges had drained all that cash away. If only, she had learned how to invest those savings wisely in the share market. Her parents were wonderful people, but they could not teach her what they themselves did not know.
Savings alone is not enough to build wealth, you must learn how to take those savings and build them into investments that work hard for you. Just saving is not an investment strategy!
But this is where the questions start. How do I invest directly in the stock market? Which shares do I invest in? How much should I invest? When do I buy and when do I sell?
With the right education and guidance on how to invest directly in the stock market, you can avoid the usual investing pitfalls.
Learning how to invest wisely will eliminate the apprehension and overwhelm that most new investors’ experience.
Knowing how to turn your savings into a sound investment strategy will give you choices and the confidence to manage your own investments.
You invest in a healthy, growing company that consistently pays you a dividend on your shares every six months. And you keep saving and as you save you invest further.
Your investment and wealth creation journey has begun, and it’s a far better road than the alternative of endlessly chasing your tail trying to catch up with money you owe others.
The future looks exciting and full of opportunity! Your share portfolio will grow. Your savings will grow. You will have a nest egg and with that nest egg will come security. You will find that you have the money to spend on the things you want.
Gaining knowledge, keeping up the savings plan and continuing to invest is one of the best ways to build a solid foundation.
Life will be good. Your savings and your assets will continue to grow. When you do find the need to borrow, you will do so comfortably and you will be able to negotiate from a position of comparative strength.
And it all started with a simple savings plan, a sound education from stock market experts, and strategies with the power to achieve your financial goals.