The Five Simple Rules of Money Investing

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The Five Simple Rules of Money Investing

The Five Simple Rules of Money Investing : In this article money pip describe how to money invest, follow 5 simple rules of money Investing. grow a portfolio, long-term investors just need to follow five simple rules. 

5 Money Investing Rules

Rule number one:

Contribute early and often To achieve exponential growth, you need time and regular contributions. If you were to invest $200 per week for 30 years, with a 7% rate of return, you’d end  up with slightly more than a million dollars. But only $312,000 of that will be your own contributions. 

money investment rule 1
Money Investment Rule 1

The other $700,000 would be due to compound interest. But if you can’t afford to contribute $200 per week, any contribution can have an impact,  and the sooner you contribute, the more time compound interest has to work its magic. Think of investing like planting trees: the best time to start was years ago. The second best time is now.

Rule number Two:

Minimize fees and taxes. Even if fees and taxes seem like small amounts, over time, they can really add up. In our earlier example, if you were paying just a 1% fee on your fund, in 30 years, you’d  have $178,000 less.

Money Investment Rule 2
Money Investment Rule 2

To limit these fees, choose funds with low expense ratios. To minimize taxes, contribute to tax-advantaged retirement accounts like a 401(k) or IRA before  you contribute to any other accounts.

Rule number Three:

Money Investment Rule 3
Money Investment Rule 3

Diversify your portfolio, Putting all of your eggs in one basket is risky.  Different types of investments carry different types of risk, so try to invest in a variety  of asset classes–like stocks, bonds, and cash–and within those asset classes, further  diversify with different kinds of stocks and bonds.

Rule number four:

Consider your time Horizon, or how many years you have to invest. If you’re saving for retirement, for example, this might be your retirement date. If you’re looking for higher returns, you may need to take on greater risk. 

Money Investment Rule 4
Money Investment Rule 4

Younger investors can typically tolerate more risk, because they have more time to recover. The less time you have to recover, the less risk you can take. To create a portfolio that matches your time horizon, combine different types of assets  to achieve the best balance between risk and return.

Rule number Five:

Focus on your long-term goals. The market fluctuates day-to-day, and if you try to time the market, you may miss out on  returns. According to the National Bureau of Economic Research, If you invested $100,000 in the  stock market in 2007 and didn’t touch it, 11 years later, it’d be worth about $238,000. 

Money Investment Rule 5
Money Investment Rule 5

If you had sold your investment during the recession of 2008 and reinvested it a year  later, you’d have $80,000 less than if you had stayed invested.  Remember: contribute early and often, limit fees and taxes, diversify your portfolio,  consider your time horizon, and focus on your long-term goals. 

These five simple rules are the most important ingredients for investing success. Simple Steps for a Retirement Portfolio.The Five Simple Rules of Money Investing.

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Disclaimer: The views and investment tips expressed by investment experts on https://moneypip.com/ are their own, and not that of the website or its management. https://moneypip.com/ advises users to check with certified experts before taking any investment decisions.

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