Most of us get a break from working for our money. But you should never give your money any time off work.
The next step after working for a living is to put your money to work for you. Short of winning the lottery or inheriting money, that’s the main route to financial success.
Keep it simple. Focus on the four major types of investments: guaranteed instruments, stocks, real estate and a business.
Don’t be afraid to learn about something new. Every successful stock or real estate investor was once a novice – making mistakes, learning along the way to success.
• Guaranteed instruments: Make sure you understand the nature of the guarantee. Read deposit insurance leaflets so you know which instruments qualify, and the limits.
Stagger the maturity dates of guaranteed instruments so about 20 per cent of the total matures each year, and each term deposit, bond, etc. is invested for five years.
• Stocks and equity mutual funds: You find few guarantees here, but you have the potential for both income and growth – balanced by the risk of loss of both income and capital.
Investor sentiment, economic trends and individual company developments all ensure prices are usually either climbing or falling – sometimes steeply.
Diversify with a variety of stocks across different market sectors – industrial, consumer, financial, technology, and so on. If you buy equity mutual funds, make sure they remain in the top 25 per cent of performers.
• Real estate: Consider commercial and industrial as well as commercial. Learn how to be a fair but bottom-line oriented landlord/lady. Know the landlord-tenant rules.
Choose location and property with the potential for improvement. Project expenses and income – and what happens if loss of a tenant means no rent.
• Business: Start your own, sideline or full-time, or invest in a new or existing business. Make sure you understand the business, and that you have a business plan.
– Copyright 2018, Mike Grenby
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