5 Keys to Investing from Money Experts
Become a better investor and take your cues from these five money experts who conquered the market and built financial freedom.
1. Build Wealth Over Time
“Building wealth is a marathon, not a sprint. Discipline is the key ingredient.” – Dave Ramsey
Dave Ramsey’s advice suggests that when you invest, you need to adopt the long term mindset of a tortoise rather than the short term outlook of a hare. You will of course hear of individuals “timing the market” and occasionally hitting the jackpot on a trending stock. However, this fortune is often the result of luck as opposed to skill.
The key to building wealth is to invest consistently and stick it out for the long haul. You should not attempt to time the market, because even the experts admit you can’t. Over the past 90 years, the average total return for the largest 500 companies in the US (S&P 500) has been around 8% per year. To capitalize on this average, you need to maximize your time in the market. When it comes to investing, slow and steady does win the race.
2. Small Amounts Do Add Up
“Look everywhere you can to cut a little bit from your expenses. It will all add up to a meaningful sum.” – Suze Orman
Suze Orman makes two important points in this quote. The first is that you need to examine your spending habits and the second is that you need to make some cuts so that you can save and direct that money elsewhere.
Try to find small ways to tweak your lifestyle, such as skipping a meal out in favor of cooking at home. This can increase your savings and you can use that money to invest in your future. Remember, every dollar you invest today could potentially be worth 10 times that much 30 years from now.
3. Manage Your Risk
“Successful investing is about managing risk, not avoiding it.” – Benjamin Graham
All investing carries risk. As Benjamin Graham points out, some investment risk is necessary to reach your long-term financial goals. While the risks can not be completely avoided, there are ways to ensure you are taking a level of risk that is right for you. For example, you can select from lower-risk investment options like government treasuries, medium-risk investments like corporate bonds and index funds or higher-risk investments like single stocks.
At Finch, we provide the tools you need to ensure you are always taking the level of risk that’s right for you.
4. Index Funds Are a New Investors Best Friend
“By periodically investing in an index fund, the know-nothing investors can outperform most investment professionals.” – Warren Buffet
The truth is you don’t need to be a Wall Street trader to make your money work for you. By following simple investing practices, such as consistently investing in Index funds as Warren Buffet suggested, you can build wealth over the long term. Index funds are a basket of securities all wrapped into one investment and are an easy way to diversify your portfolio at a low cost. This makes them a great option for a new investor’s portfolio. You can easily invest in index funds right here at Finch.
5. Money is a tool
“Money can’t buy you happiness but it can grant you the financial independence and freedom to live life in a way that makes you happy.” – Finch
Finch is getting to the root of an important idea about money: it’s simply a tool for enabling financial independence. Financial independence is a state where you are in control of your personal finances and have enough income to cover your expenses for your entire life, without being dependent on others. When you no longer need to worry about money, you are empowered and have the freedom to design the life you want.
Taking control of your money is the first step towards gaining financial freedom. Finch can help. Our purpose is to empower you to put your money to work and take steps towards financial freedom.