Investing in your future

More than ever though, people learned a valuable lesson about good savings goals and safeguarding their financial futures. People who put off their investment plans due to current bills realized that they needed to change their habits. If you are one of the millions of people who found their savings insufficient to last throughout the recession, then you need to start your investment plan. Experts say that with as little as $100 any consumer can start a new financial life.

The reasons people fail at investing

Though investing is crucial to building wealth as quickly as possible, there are some culprits that thwart even the most vigilant investor’s plan. First of all, market timing is one of the hardest things to overcome. Experts will tell you that there is a right time to invest, but can they really predict the future? They can try, but studies have shown that even the best investor who has watched the market vigilantly for years is only 70% accurate with predictions. The reason is because the market tends to make its biggest fluctuations due to unexpected events.

Second, there is the age old advice to “buy high and sell low.” The problem with this advice is that it inevitably sets investors on an egg hunt for the hottest stocks or mutual funds. Seasoned investors may be able to weather the storm and come out on top, but novice investors inevitably get tripped up with the choices. In addition, the stress of searching out that one big stock can be too much for new investors to manage and cause them to throw in the towel on trading too early.

Finally, the biggest problem with investing is a failure to diversity. The key to maximizing returns is to diversify and without a good investment plan that takes into account all the types of products available, one blow and your money could take a huge it. That hit may be so large the account never truly recovers from it and you are left with drastically smaller account totals than hoped for. The best formula for building a portfolio is to take 25% of each of the following:

• US Stocks, or those on the S&P 500 Index
• Foreign stocks, or those on the MSCI EAFE
• Real estate, or the National Association of Real Estate Investment Trusts (NAREIT) Equity Index
• Gold, oil and other commodities, or those represented by S&P Goldman Sachs Commodity Index

Investing with $100

Money now that the recession is over comes in much smaller amounts, but that isn’t necessarily bad news. Starting with $100 from a tax refund is enough to get any new investor on the road to saving. The easiest thing to do with the additional money is to open up an IRA with any big broker and then commit to investing an additional $50 to $100 a month into the account. The biggest caution when it comes to starting with a small amount of money is to find an account that offers transactions costs that are as minimal as possible. ShareBuilder.com and Zecco.com are two online brokerages that keep trades down to $4 and $4.50, respectively. To minimize trading costs, all consumers should rotate their initial purchases among the following: Rydex S&P Equal Weight, Vanguard FTSE, Vanguard Total Bond Market, Vanguard REIT Index and PowerShares Deutsche Bank Commodity. For those who are starting with just $100, it is more beneficial to trade four times a year at $300, rather than monthly.

Being financially ready

If you are looking to invest but only have a small starting amount, rest assured that it will still grow steadily. Of course everyone should watch their money now more carefully than ever, but a good investing plan is a tool that will solidify your financial future. It isn’t hard and primarily requires determination and focus but in today’s volatile market, it is a necessity to be financially prepared for anything.

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The one thing you need to do in order to prepare for investing, besides applying for a short term loan, is to get completely clear on your financial goals. This will help to determine how much you need to invest, as well as how aggressive you want to get with your investing strategy. For example, if you are close to retirement and you haven’t started investing yet, then you will need to go with safe investments that will provide a secure income for when your main source of income becomes greatly reduced. However, if you are young and are just starting out, you have more time to recover from a bad investment here and there.

Before you start

Before you start investing however, you need to first determine when you will need this extra income. If you are close to retirement, then this will be within the next few years. Next, you need to determine how much you want to earn from your investing activities. If you are only looking for modest gains in the long term, then look for slow growth funds that will help you achieve that. But if you want aggressive gains in the short term, you will need to look for the more volatile stocks. While these are often risky and you could lose everything you put into them, they also can pay off very well, with the potential of making you very wealthy.

How do Payday Loans Help?

Once you have determined your financial goals, you will need to make sure that you have the financial resources to get started. That’s where payday and short term loans come in. But don’t misunderstand me—I am not, by any means, telling you to misuse these or get yourself in debt way over your head…because that will not help you achieve your long term financial goals. I am, however, telling you that if you do not have the resources to get started, applying for a short term payday loan could help you make the initial investment needed to begin your investing activities.

Be Responsible!

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I must caution you though—if you do this more than once or twice, you could get yourself into trouble by digging yourself into a hole. Meaning, if you take out a payday loan, and then when payday comes, you use that check to pay off your loan…then you take out another loan to cover your living expenses…and so on and so on it goes until you are buried so deep in debt that you can never recover. The responsible way to do this is to take out only that amount that you can comfortably live without from your next paycheck, so that you are not digging yourself into a hole.

Credit Cards?

Will credit cards work? That depends on the fees you have on your credit card versus the fees you end up paying for your payday loan. Determine the difference, and go with the method that will give you a lower rate. However, many people tend to have tarnished credit, so a credit card may not always be an option. Either way—you need to determine what will work for you, so that you can take charge of your financial future!