The second last method to achieve financial freedom is a MUST-TO-DO step.
After following all those steps; smart saving, payoff debt plan, spend wisely, and so on, you are in a position to step ahead for the last method. This is about investment. It is just a word with 10 letters, but this word can make your path to financial freedom a million times easier.
The sooner you get involved with investment, the more time your money able to grow until you had enough. However, you have to open your heart to do your research about this new field before jump onto it. There are quite many and different investments available so read ahead.
These are the investment you should try:
1. Retirement Savings:
Start taking advantage of retirement savings for as long you work there. You can try asking for an expert such as the company’s financial advisor for more details.
Many will invest 15% of their income for retirement for a better profit.
Many people apply the Roth IRA as it is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. The only rule to enable you to withdraw the money without owing any federal taxes if you have to own your account for 5 years and you’re age 59½ or older.
It is a good investment as all your retirement money will go back into your pocket, without having to cut for any tax.
Read here for more about Roth IRA.
2. Real Estate Investment
Before you start to involve in real estate investment, it is advisable to get rid of any mortgage first.
Investment real estate is when you invest in real estate that generates income rather than being your primary residence. Many rich and extremely rich people goes for real estate investment as they see things further away. It will unconsciously continue to grow in value as the years go by.
For instance, you can invest in many pieces of real estate. The first one can be your primary residence, while the rest are used to generate rental income and profits through price appreciation. Read first about it in more detail especially about the tax implies.
For the beginner, maybe you can try to search for the first rental property with low cost yet gives higher returns. It will give you a lot more passive income in the future.
Click here to read more about Real Estate Investment.
3. Index Tracking Investment
A tracker fund is an index fund that will track a broad market index or a segment thereof. Apart from that, it is designed to offer investors exposure to an entire index at a low cost.
An index fund often buys a share in many different companies that they track that can be small or massive.
These are a few things you should know before joining an index tracker:
- You might get back less than you invested as the index is going up and down according to the performance.
- An active fund might be for you if you chose to take more risks with higher fees to beat the market.
- Index funds usually invest in a variety of markets that carry specific risks. Please see the Key Investor Information Document for full details.
4. Taxable Investments Account
A taxable investment account offers your low turnover rate and minimizes your tax impact. It can help you to be more flexible for investors beyond tax-advantaged savings vehicles common in retirement and educational savings.
Therefore, discuss with your financial advisor to choose which stock mutual funds with a long history of above-average performance and low turnover rate. It can reduce the impact of the tax.
But how do you decide what to invest in?
Personally, for me, I am quite broke at that time, hence I will go for index tracker. This is because the index tracker buys lots of shares from many big and huge companies over the years.
On the bright side, you can just invest a little to buy a tiny amount of every successful companies available. Just imagine, you are already quite rich as you have a share in many massive companies. Even though it can go ups and downs, still, it’s a big company hence a tiny part of your share still worth much.