You’ve been taught for so long that buying a house is the greatest investment a person could ever make. “It’ll only increase in value!” you told yourself. “It’s a long-term investment!”
Of course, with the collapse of the housing market, you may be starting to think twice about home-owning as an investment. It may be a great purchase, sure, but perhaps not an investment.
There are tons of ways for you to build your investments outside of your home (Forex trading, for example). Here are some tips that you can use as a starting point to maximize your investment prowess.
- Start With Savings. You can’t begin investing unless you’ve got savings. That means real savings, not the stash of money you keep in the savings account and withdraw in its entirety every few months. Save six months’ worth of income and never touch it. Ideally, you should save for a year. This way, if you’re unable to work for any reason (because of a sick parent or child, a broken leg, unemployment, etc.), you’ll still have something to fall back on. Then start saving for your next investment.
- Estimate Your Retirement Needs. You need about 70% of your final annual salary to maintain your retirement lifestyle. Don’t forget to account for inflation!
- Set Your Goals. In order to reach your retirement goal, how much do you need to save per year? Per month? Per week?
- Decide How (and Where) You Want to Invest. You need to decide which level of risk you’re willing to take. Many people start with low-risk investments and build from there.