In 2005, people spent 125% of what they earned. They spent money they hadn’t earned yet, so they built up debt and paid interest on that debt every MONTH. If you spent less than you earned than you were actually paid interest on your money, quite the opposite. The return you can expect on that hard-earned money largely depends on the level of risk associated with it. However, no risk equals no reward; risk is not some big scary animal that we all run away from.
The first thing you need to decide is how much money you want your investments to generate. It could be from 1% to 30% and everything in between. The one percent return is incredibly low but very safe. Actually, 100% sure since that’s what your savings account pays for. If you think you’re making money on your savings birthday, then you forgot to think about inflation. Suppose that inflation is around 3% per year. If your investments are returning 3%, you have broken even. You didn’t make a dim turning into inflation took 3% of the purchasing power your money had a year ago Away. $ 100 Today only $ 97 are worth in one year. If you invest at 3%, which is $3, you return to $100. Get a 3% discount on your return and that is your real return.
If you want high returns, don’t expect to be risk averse. The higher the reward, the higher the risk you need to consider. Bonuses are currently around 5%. This is 5% safe and you will not lose that money. Once you factor in inflation, it suddenly becomes gas money. The stock has outperformed any other investment in any 20-year period. The actions are the ones that shrink the most, but there are many ways to enjoy the rewards of the stock market without worrying that he is losing the background for their children’s university. You can buy an index fund that invests in the S&P 500 or the Dow Jones. The S&P 500 IS 500 Companies If you invested $500, $1 WOULD BE IN EACH company. The S&P earns around 10% per year. There is a very small chance that the s&p will go to zero, although there are years of correction. That is why it is necessary to invest in the long term. If you start buying in one of those right years, you will lose money but think in the long term and you will realize to buy strong in those corrective years. Buying low and selling high is the game, but many of us do it the other way around.
When investing, not only risk and reward is important, but also your age. This may be new to you, but age is very important for investing. Age tells us what level of risk we should expect. If you are 20 years old, you should invest in the riskiest funds possible. The reason is that a person has more time to replace that money if he loses everything. An older adult does not have those years and the advice is quite the opposite. Little or no risk and invest only in fixed income, which are bonds and CDs and 100% safe alternatives. The older you are, the less risk you should allow. 10% fixed income for every decade you have is a general rule of thumb. Do the math and determine your level of risk.
There are plenty of safe investments, but as the saying goes, “no pain, no gain.” The reward for “the bread” is the 10% and more return that you could enjoy.