Investing is the best way for you to become financially independent and at the same time enables you to create or generate wealth . It is worth noting down that the stock market is not only for wealthy individuals.
If you decide to employ a strategy of fast track investments , you will realise that small amounts will begin gaining size leading to faster or increased growth. Accomplishing this feat is not an easy task since it requires careful implementation of a certain strategy and staying disciplined, diligent and patient.
Ways To Fast Track Investments
- Choose The Right Account
You should choose the right account according to your investment needs. Below are some accounts to help you get started.
- A Traditional Retirement Account for individuals. It generally assists you in limiting how much money that you contribute . You can’t be able to withdraw funds until you reach the age of retirement. The withdrawals will also be taxed. It is worth noting down that all the investments grow and compound tax free.
- Taxable account. In this account all the income that you earn within the account will be taxed in the year which it was received. If you sell or trade your stocks for profit, you will surely pay the required tax. Money in this account is available without penalty of the accounts unlike in tax deferred accounts.
These two accounts will definitely help you fast track your investments.
- Apply Compounding
If you’re looking to fast track your investments, you should consider to apply compounding. Compounding is actually a very important aspect in investing. This is because it involves generating earnings from a stock based on the reinvested earnings of the stock.
– Try to assume that you invest about $1000 in a particular stock in a year, and that it pays a dividend of 5% each year. In year one, you earn $1050 while in year two you will get approximately $52.5 in dividends. This is actually higher in comparison to year one where you received $50 in dividends.
– After some time, you will realise that compounding will generate huge growths.
-It is also worth noting down that the value of the dividend and the stock may not always remain constant. It may increase or decrease .
- Avoid concentrating only in a few stocks
You should definitely not pay much attention to particular stocks when you’re investing. Ensure that your money is spread out over many stocks that are different. Diversification is the key to fast tracking your investments.
– If you buy just one stock, you are generally subjecting yourself to the risk of that particular stock losing its value. Buying many stocks that are different basically reduces this risk.
– Try to invest in products which mainly provide you with diversification. These may include ETF’s or mutual funds.
- Find a mutual company or a broker that suits your needs
A good mutual fund or brokerage company that suits your needs will definitely help you a lot when it comes to investing wisely. Focus mainly on the value and cost of the services that a broker will provide you.
– If you settle in a place with higher commissions which go together with high quality customer service, you will generally get expert and professional advice regarding investments.
– Look for a place that meets all your customer service needs and at the same time charges you low commissions. There are many discount brokerage firms and all you need is a little patience to ensure you get the right one.
– Pay close attention to the pricing plans of each brokerage firm.
- Ensure that you keep up the pace
The pace of your contributions is actually very important and you should always try to keep up the pace. Ensure that you stick with both the frequency and the amount that you chose earlier.
– Try to pick stocks with low prices. Basically, the less expensive the stock prices are currently, the more upside you can expect in future.
- Ensure that investing is the right move for you
Before you start investing, it is very important for you to know that the stock market is actually quite risky. You may end up gaining profits or losing money permanently.
Ensure that all your basic financial needs are taken care of in case you’re faced with a catastrophic predicament.
Ensure that you always have some income in your savings account, that can last up to 6 months. This ensures that you don’t rely on selling stocks if you require money urgently.
Take a portion of your income and ensure that your insurance needs are met.
The steps above will definitely assist you in becoming financially independent and also in fast tracking your investments.