Investing money is something many people shy away from for various reasons, one being that it can be overwhelming. Investing can be as simple or as complicated as you want it to be, the point is that your money needs to be utilized in a way that will allow it to grow and produce yields faster than inflation. Inflation is the reduced value of the dollar over time, so as the cost of living and prices rise, our money buys us less.
Now that’s a lousy deal, but unfortunately it’s what we’re up against. There are many different ways and strategies when it comes to investing and it all depends on your goals, your risk tolerance and how hands on or passive you want to be in your investing. There are varying strategies in which to invest from more aggressive to less aggressive, with even the most passive, less aggressive strategies still having a certain degree of risk.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson
The most common and simplest strategy for investing for your long term goals is an employer sponsored 401k or an equivalent type of investment vehicle for those that are self employed. As an employee, that type of strategy is the simplest to set up and easiest to stick to with when given the ability of having funds automatically deducted right from your pay checks before you even see them. For the self employed, it will take a little more discipline to make sure those funds make it that account.
That type of strategy is more of a passive, hands off approach to investing which is the very least you should be doing. Then you have the more hands on approach, for example, of trading stocks and/or bonds for yourself, managing your own funds, investing in real estate, etc. Of course the more aggressive your strategy, the more risk you assume, but it also gives you the ability to out pace the inflation game much faster.
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