SALARIES / JAN. 06, 2015
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How to Invest Your Salary

It doesn’t matter if you’re young or old; your salary is something you have in common with everyone else in the working world. It might not be as big as some people’s, but whatever you earn it’s important to invest it in the right way. With pension plans not providing the security they once did and employee investment plans not as attractive as they once were, here’s your chance to start investing your money the right way.

Pay Yourself First then Save

It’s important that you think of your present expenses before thinking of the future. Don’t even think about any investment until you’ve successfully paid off your expenses for this month. Take whatever you have left over and put it aside. This is for everything from luxuries to savings.

Start by aiming to save at least 10% of every pay packet you get. Even if it’s just a few dollars, this will soon mount up into a huge investment fund. Open a high-interest account that you can deposit your savings into. This will enable you to beat inflation and get the most out of your money.

Consider Low-Risk Investments

Any good investment portfolio must have a solid base to work off of. This means you need to have a certain amount of money invested in something that’s low-risk, which also means low returns. Gold is the obvious answer, but remember you will have to pay a small storage fee. It’s unwise to keep any precious metals with you at home.

Also, consider Exchange-Traded Funds (ETFs). These allow you to invest in a number of companies and industries at the same time, thus spreading your risk. Typically, ETFs will only use the biggest and the best companies. The prices of these companies won’t change that much that often.

Research or Call an Expert

Any good investor knows that they need to keep their fingers on the pulse. This requires you to regularly check on the prices of various things and to see economic problems before they come. The problem is this takes time and a certain amount of expertise. If you don’t feel qualified or you don’t want to invest the time, it may be worth setting some money aside to employ a financial manager.

There are so many financial managers available for you to use. They work with all types of clients on all types of investment. Look online to see what type of investment manager is right for you.

Remember to interview and interrogate different financial managers before you start to pay a fee. Some managers will offer free initial consultations.

What about Stocks and Shares?

We recommend you stay away from stocks and shares. The stock market tends to suffer severe slumps and massive highs. It’s a rollercoaster ride where most people lose money. Very few people will consistently beat the stock market over a period of years. And those that do tend to get lucky.

Whilst we wouldn’t discourage people from playing the stock market with a small amount of money, for most people this isn’t a good investment option. Only venture into the stock market if you don’t mind losing the money and you’ve done your research. Learning about the markets takes a long time, and even after many years of study a lot of people still don’t get it.

Consider the stock market a high-risk option.

Overall, investing in your future via your salary requires discipline and the will to make small sacrifices now. Try to save as much money as possible and cut out those frivolous expenses. Get it right and you can look forward to a happy and healthy long-term financial future.

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