What did you achieve financially last year? Make this coming year the year to go further with your investment portfolio, by resolving to be smarter about your money management.
Figuring out your net worth allows you to see where you are and look at the big picture when it comes to your money. When you benchmark your existing net worth and assets, it’s easier to move toward your financial goals and quantify how much yield you want to get out of your money. An overview of your finances may bring to light some less apparent financial goals like putting more towards your retirement or paying off a high interest loan. It will also give you a good idea of your financial progress – whether you are on track towards financial independence, or are lagging behind with unhealthy spending habits.
Here’s another great tip for getting better capital gains — stop pouring money into depreciating assets. Any financial advisor can tell you many people make the mistake of buying expensive assets that depreciate over time. Some of the most common ones are new cars, jewelry and the latest new electronic gadgets. All of these will quickly lose value. For example, a $35,000 car will only be worth an average of $14,000 after five years of ownership. On the other hand, investing that $35,000 at 15% will give you the opportunity to double your money in five years. When you look at the outcomes, the picture is clear. Investing is the opposite of throwing money at expensive items that will just become cheaper over time.
Over half of Americans choose to keep their money in savings accounts for fear of making an investing mistake and losing their hard-earned cash. A savings account may seem like a safe alternative to taking on investment risk, but the reality is a bit more complicated. An average savings account yields 0.06% per year, while the average annual inflation rate is 3.22%. That means that for every year that you let your savings sit in a low-yield savings account, you may be losing close to 3% of your hard earned money annually. In order to outpace inflation, invest in opportunities that yield at least 3% per year to actively grow your money. Look at platforms like YieldStreet to get higher yields and make your money work for you.
Every April, most people get a check from the IRS. That’s money in your pocket — but a lot of people see that as an opportunity to spend. They find something they’ve gone without during the year, whether it’s a vacation or an expensive item that they’ve wanted. If you are able to withstand the temptation put that check away for long-term investment, you can easily get a start on building long-term capital. With an average tax return of ~2,500$, it would take only 4 years to build $10,000 of investable capital, and start growing your savings.
Procrastination is one of the biggest enemies of investors. Beginner investors may feel like they don’t have enough experience to start investing, or may be waiting for the “right” opportunity to come along. The fear of not making the correct choice is keeping millions of potential investors from putting their money to work. The truth is, you’re missing out on money every month that you delay investing. This holiday season, make the time to become more proactive about your investments – determine your investment goals and risk tolerance, and pick an investment opportunity that’s right for you. Remember that “no decision is a decision” – it’s a decision to miss out on big gains.
Use the beginning of this year to come up with that overall figure that’s going to represent what you have now, so that you can plan what you want to have later.
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