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Investing your money can be a difficult decision to make. When should you start investing? How much of your income should you invest? How much money will you need in order to retire? Which type of investment is best for you? The answers to these questions will vary depending on your situation and goals. Read on for information that could help make these decisions a little easier. 

Setting Aside Income to Invest

When beginning to invest, it’s important to plan out how much of your income you want to invest. One popular way to go about this is to save 15% (or more) of all new money you earn. When choosing how much of your income to invest, start with an amount that you could easily commit to putting aside each month and won’t leave you feeling too stretched, and adjust as necessary. 

Ultimately, whatever percentage of your income you can set aside will help out in the long run. One advantage to setting a percentage is that as your income grows, so can the amount that you are investing. This way when your income increases, you can increase how much goes toward investing and building wealth in the future.

When Should I Start Investing?

We recommend that you begin investing as soon as possible. The sooner you invest, the greater your chances are of maximizing how much money you can make from investing in growing companies or in other areas. Even if it means putting aside a small amount each month, every little bit counts over time!

Pros of Investing

Investing typically means taking your money and investing it in companies, mutual funds, or businesses that are growing. Sometimes these investments can also be referred to as stocks, shares, or units of ownership where the investor is entitled to any profits made by how well the business does over time. Doing this can not only help keep your money safe but could also increase how much you have if your investments are successful.

Cons of Investing

The main drawback to investing is that if the investments do not pan out as you expected, then your original investment can be lost and gone forever. This is why it’s important to do your research and make informed investments. Another way to help protect your overall portfolio is to diversify your investments, which means you are investing in many different types of companies in different industries. This could help you to spread around your risk so you aren’t as susceptible if one company has significant issues that cause its stock to plummet.

How Much Money Will I Need to Retire?

How much money you need for retirement depends on many factors, including how much you plan on spending each month, how long your money needs to last, and how comfortable you want to be in retirement. It’s important that people plan for the future because if they don’t then they will likely end up working well past the typical retirement age, which can be a terrible way to spend one’s golden years.

Ways to Invest Your Money

There are many different ways to invest your money, but the best option for you depends on your goals. If you’re looking for a quicker turnaround, then investing in an up-and-coming stock could be the best way for you to grow your money. However, if you are looking longer term, investing in a mutual or index fund could be a good option as you aren’t tied to a specific stock and can have more stability.

Importance of Diversification

Diversification is key to minimizing the amount of risk that you are taking on when investing. If you put 100% of your money into a single stock or business, then the success of your investment is tied to the performance of that one business. This is great if the business is successful, but if they falter, then you may lose that investment entirely. However, if you diversify your investments across multiple stocks and businesses, even if one fails there are likely others who will do well so the risk is spread out across more companies.

How Can CreditAssociates Help? 

If you’re starting to plan for your long-term future, we recommend dealing with your debt to help set yourself up for future success. Reducing the amount of money you’re spending on debt repayments could help you free up funds to invest and save. If you want to see how our team could help you get out of debt in as little as 24-36 months, reach out to one of our certified debt consultants today who can give you a free debt consultation and provide you with a personalized debt relief plan.

Common Questions About Investing: 

What should I do if I can’t afford to invest?

If you can’t afford to invest, we recommend you identify ways that you can decrease your expenses or increase your income. Doing these things can create some wiggle room in your budget so that you can then invest. Small things like cutting back on dining out, selling extra things around your house, or picking up a side job can have big returns.

What is the 50-30-20 budget rule?

The 50-30-20 budget rule states that you spend 50% of your income on needs, 30% on wants, and 20% goes toward savings. In this case, savings could be used to invest so it grows over time and is ready for you when you are ready to use it in retirement.

How do I stop living paycheck to paycheck?

Start with a budget where you can track your expenses. Then identify ways you can cut back on spending. You can then use the extra money left over for savings. Even if you only save $20, it’s better than nothing at all! You can also create an automatic withdrawal so that your savings are taken out of your checking account before you even see the money (and more importantly, before you have a chance to spend it). 

What is the best thing to invest in?

There is no one perfect thing that you should invest in. You should make sure to analyze every investment opportunity to make sure you are making the right choice. You should always make sure to take potential risks into account as investments aren’t foolproof. The risks can also increase if you aren’t committed to doing your research prior to investing. If you need help, we recommend speaking with a financial advisor.