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Sound investment strategies can help you build a very prosperous future.
You must try and develop a new investment strategy for each stage of your
life. You must be aware of all the investment
opportunities available in the market and use them to
your best advantage depending upon your stage in life. If you start saving $200 per month regularly for 20
years, you will have saved $48,000. But if you invest
the same amount regularly and wisely for the same period
it can be easily turned into $5,00,000. People save
money in piggy banks and also in normal banks. Have you
recently checked how much interest are you getting on
your savings in your bank account, I am sure you would
have realized that the banks do not give interest on
savings accounts worth getting excited about . If you
think about term deposits and some smart saver accounts
they do give you some better interest like maybe 4%-6%
but remember the catch you have to pay tax on all these
earnings at your highest tax bracket. So if you are in
the 50% tax bracket you will straight away loose 50% of
your interest every year to the tax man. And if you hold
your investments for more then a year the taxman gives
you 50% discount on your capital gains tax (egs.
Australia).
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The investment strategies of an 18 year old would and
should be quite to different to that of a 30 year
old and the needs of investing of a 60 year old would
also be very different from both of them. Remember the
earlier you start investing the better your chances will
be of retiring rich. First of all we must clearly know
the difference between saving and investing. If you
think you would earn enough throughout your life and by
saving regularly you can become rich, then you will be
among a very few who would have done that. But if you
can invest regularly there is a very good chance that
you will become rich. So remember it makes much more sense to invest wisely
and regularly then it makes sense just to save
regularly, of course you have to be able to save to
invest. So what are the investment options
available to us in this day and age.
1. Shares, Options, CFDs, Property residential and commercial, Bonds,
2. Mutual Funds
3. Gold, Diamonds
4. Art
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Some good investment tips:
- Make your money work for you. Learn how to
invest money and make it earn for you. Read books,
scan the internet, gain knowledge and become a
learned investor.
- Never put all your money in just one investment.
Remember the old saying "Never keep all your eggs in
the same basket". Diversification is very important
to keep your money safe and growing.
- It is inevitable that your investments
will not keep growing all the time, there will be periods when they
start to decrease in value. The Share Market, the
Property market all have there periods of gloom, but
if you invest in quality then you can be sure that
your investments will grow over time. On an average
both the share market and the property market have
always outdone a simple saving strategy.
- Borrowing to invest can be a very good strategy
for the young and who can invest wisely with some
good advice. This strategy is known as leveraging
and can become a very good tool to become rich fast,
but if done badly it can also make you loose your
capital at a much faster rate. Remember there good
debt and there is bad debt. Good debt is taken to
make investments and which returns more then the
interest that you are charged for it. Bad debt is
taken for your needs and luxury. Loan for
buying property and shares can be classified as good
debt. Credit card loans for shopping, car loans can
be classified as bad debt. Eliminate your bad debt
as soon as possible and try to have as much good
debt as you can afford to have. Good debt makes you
richer by the day and bad debt makes your poorer by
the day.
- Your investment should contain components of
both risky and safe investments. Remember your risk
component should be larger when you are young and
should decrease with age. It is easier to recover
your losses later on if time is on your side and the
gains are also always proportional to the amount of
the risk in the investment. But the risk should
always be a calculated risk. You should never invest
in schemes which sounds too good to be true.
- Never sell when you feel the stock or any other
investment has reached its bottom. This way you will
loose money and also loose a chance of any recovery.
Remember that history tells us that both the stock
market and the property market have always bounced
back.
- Be patient and always invest with a long term
view of the market. The market is known to transfer
the money from the impatient to the patient.
- You will make mistakes. Learn from your
mistakes. Remember everyone makes mistakes.
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