In this episode, I discuss building networth through your financial goals. When it comes to money, most of us have one goal. That goal is to make money from our money that we use for investing whether it’s investing in stocks, bonds, mutual funds, saving accounts, options, futures, cars, artwork, coin, stamps, property, businesses, and the endless places you can invest money.
When it comes to investing there are two types of investing. There is the trader who trades in and out of the investment in the short-term. The goal of the trader is to make money in the short-term and move on.
Then, there’s the long-term investor who is there for the long-term. Warren Buffet would be the most identifiable person for long-term investing.
When it comes to investing, what is your goal(s). Define your goal? Is it retirement, purchasing a home, purchasing a car, investing for a nice vacation, send your child or children to college, or something else?
Once you’ve defined your goal, then it’s time to decide where you will be investing or what investment you will be putting your money into to hopefully watch and make it grow. Will you invest in stocks, bonds, mutual funds, saving accounts, options, futures, cars, artwork, coin, stamps, property, businesses, or some other type of investment. You can even mix up your investment to invest into different investment through diversification.
The best way to invest is to invest on a regular schedule each month or quarter. This helps to cost average the cost of your investment. In the example I gave in the podcast, if you invest $65 per share one month and $60 a share the next month, the average cost of the investment is $62.60 per share.
As I have always said in past episodes, know when to get out if the investment turns on you. What may be true yesterday or last year for an investment may not be true this year or tomorrow. You may not always have a gain from your investments; but, you can reduce or eliminate the risk on the downside for the loss especially if the investment outlook is going bad. The example I gave here is the podcast is Enron and a few of the retailers declaring bankruptcy here lately or where they given notice as a going concern.
When it comes to investing and saving, you have to stick to your budget. A budget will tell you how much money you expect to have after the bills are paid for the month. Think of it as a monthly net income for your personal finances. Take some of the money if you have any left over at the end of the month and put some into savings and some if it into your investment.
One thing you’re need to consider when it comes to bonds, stocks, Electronic Trading Funds, and other investments is the trading fees. Although for some brokerage companies, the cost is coming down for transactions fees. Currently a few brokerage firms have reduced their transaction fees to $4.95.
There are other options when it comes to choosing a brokerage firm. You can manage your money yourself or you can hire someone else to manage your money for you. Most money managers will charge 2.5% to 5% on a sliding scale depending on the size of your brokerage account on the amount being held and managed by the brokerage firm.