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Money Talk: Investment 101

People often say that money makes the world go round. While money can’t buy everything, it is indeed vital for survival, which is why all responsible adults must know how to manage their personal finances well.

Accordingly, investing allows you to build potential wealth and make sure that your hard-earned money will grow. However, if you are fairly new to the world of finance — whether you just moved out from your parents’ home or have only started your first job — there are simple ways for you to master the game of investing.

Don’t be daunted and take your baby steps towards financial freedom. In this guide, we’ll discuss some fundamental ways on how you can make smarter decisions when choosing investments.

Speak the Money Language

Words matter. If you do not know the definitions of terminologies, you can end up making poor decisions. That’s why it’s indispensable that you develop an adequate understanding of basic investments such as equity, mutual funds, bonds, and other more specific types. Read up on financial literature or watch instructional videos online.

Seek Professional Assistance

You can’t just trust people blindly, even if they are your family or friends. Remember that your money is the product of your own hard work, so you should be careful where you invest it. Conduct initial research or consult an actual financial adviser with proven expertise in the field of investing rather than relying on testimonials.

If you’re planning on using accounting software, then it would be better to find Xero accountants in Leeds than do everything by yourself. Well, you can do that, but only if you already know how to operate them properly. For now, get all the help you can.

Be SMART

Smart stands for specific, measurable, reasonable, relevant, and time-bound. By setting smart goals, you can be saved from the disappointment you can get from building unrealistic expectations.

Your investments may not always bring the highest turnovers, but they can be rewarding in their own way. Instead of focusing on the returns, craft a detailed plan consisting of your investment goals and their accompanying time frames. If you want to build millions of dollars in a couple of years, you’re only dreaming of a fairy tale.

By keeping a realistic mindset, you can also stay logical and not be driven by emotions. Remember that some investment plans may sound too good to be true with descriptions of big amounts of guaranteed returns. Don’t be persuaded and steer away from such investments.

Choose Future Security over Past Performance

Simply because the past performance of an investment is excellent doesn’t mean that it’s geared for future success. Drive forward and weigh things carefully. It’s also best to know the particular terms and regulations surrounding every investment you’re selecting.

Accordingly, a company under the Seed Enterprise Investment Scheme (SEIS) is a safe choice as it allows you to claim reliefs on investments that you made. More specifically, with the SEIS reinvestment relief, you can benefit from loss relief in case the company you bought shares from fails in the future. Do your research to know if the investment you’re vying for is eligible for the SEIS.

Don’t Borrow to Invest

Monitoring investments

It’s vital to note that investments don’t always pan out as well as you desire it to. To be on the safer side, don’t borrow money for investing. When you end up losing money on your investments, you will still owe money from the lender, and this can lead to piles of debt if not managed properly. This is especially applicable to real property like a condominium unit or a house as they require monthly payments for mortgages.

Even financial gurus started small, so don’t be daunted by the task of learning the ropes on investing. By mastering the basics, you can eventually gain experience in the money game and make better decisions over time.