How To Get An Early Start On The Journey Of Investing

I spent New Year’s Day with my favorite brother and got to see places and things that inspired me to work hard, count my blessings and appreciate how every day presents itself with something new to learn.

I took time to go to the local market to check email as there was no network coverage at my brother’s farm. While browsing I noticed the boy seated next to me was on a college website applying for his first term.

While smiling, I thought how technology had revolutionized communication, ease of access to services and just how great it must be to be able to access education online. Years ago when I was accepted for my undergraduate studies, we had to do everything through with and at the main offices and not at the comfort of any computer in a cyber cafe.

We struck a conversation and he asked me if he was pursuing the right course and if he could use his money wisely to invest as he was studying.

I was impressed that this smart boy was already thinking of his future. I gave him my two cents and explained that the course was great for him and would give him a myriad of organizations to work for. When it came to investing I wished I had been thinking like this boy 20 or so years ago.

As a First Year student, I vividly remember an acre of land in Kahawa Sukari in Kenya, East Africa was being sold for less than Sh10, 000. Twenty years later and the same is not less than Sh10 million.

As much as land is always a sure bet to invest in, wise investments can stem from different decisions and options.

Not everyone can afford to buy a piece of land at the time they are thinking of investing, but there are a number of ways one can invest to reap long term results from small amounts of money.

Extensive market research, however, needs to be carried out in order to invest wisely, whether in the stock market to shares, mutual funds, government bonds or even crafty Ponzi schemes.

Investment brokers and firms can be used when one can afford their services, but if you are low on funds, then you can always choose to go it alone.

But before you invest, you might want to consider a number of things;

Do you know about the product?

I love cereal – especially Fiber One honey roasted oats. If I was to invest in something, it would be something I use and believe in. Most of the times we fall prey to hearsay and dash into making an investment or buying shares thinking that a friend or neighbor reaped large profits from their investment.

If you are going to invest, why not invest in something you believe in or something you use on a regular basis – that way, every time you use the product you can smile at the profit you might reap in the long run.

Are you investing short or long term?

The undoubted way of reaping profit from your investment in an unpredictable share market is long term investments with little risk. If you do not have time to keep checking share index prices every morning, then long term investments would be best for you.

Keep some money aside and wait for a long time and in the end you will feel like you bought that piece of land in Kahawa Sukari 20 years ago.

Invest in smaller organizations

Investing in a small company that shows promise other than a large corporation that can sometimes be volatile or hard to predict is a better bet. Smaller companies with fewer shareholders work harder at building and growing. A sure way to reap results would be to invest in passionate companies that you are sure will grow steadily but surely.

Invest money you can forget you had

Investments are a lot like loans. You can only give money to a friend you can do without so when you get it back no matter how long it takes, it is a pleasant surprise. When you invest, you should not feel the pinch and try to rush back for your money nor should it generate ill feelings.

So make a strategic plan and start investing as early as you can – remember that it is never too early nor too late to see your dream come true and you can start with very little – just be patient and remember you have planted a seed that you might sow in the near future.

Investing Smart

Successful investing is smart investing. Investment is all about making the right choices, so that not only are you able to satisfy your immediate needs and requirements, but are also able to ensure the same for the medium and long term future. Just as no two individuals can be exactly the same, the financial needs and investment patterns vary from person to person. However one can follow certain definite markers to ensure that the path taken is the right one.

Understand Your Needs: Investment goals come with different time frames and different objectives. One may invest for a short term goal like buying a car or even a holiday abroad. On the other hand, one could consider a long term investment plan to cater for the period when one has retired from work. How much one is able to commit to investment is dependent entirely upon one’s risk taking ability.

When it comes to risk taking there is some truth in the adage that greater the risk, more the reward. That does not however mean that one should be reckless. Everyone possesses a risk threshold that they will not consider crossing. Factors like the level of a person’s income, one’s net worth, one’s ability to understand the investment scenario and the objectives behind investing drive how and how much a person invests.

Early Bird Catches The Worm: The younger that one embarks on one’s investment journey, the better are the gains. The compound interest that you will make as a young man would fetch quite impressive gains by the time you started getting along in years. For instance if one started investing $93 every two weeks starting age 25 one would reach an amount of $500,000 when one hits sixty.

This is a painless and easy way of building up a fine retirement fund. At age 25 if you are not married; you would hardly have any major expenses to worry about, and could afford to put away some money. As the years go by your responsibilities and expenses will increase, but so will your income, and you will not feel the pinch of the regular installment you committed to paying when you were so much younger.

Invest Regularly: This definitely makes a lot of sense for most people considering that it is far easier to invest small sums regularly than investing a large sum at one go. Firstly one might not be able to afford the latter and secondly one does need money for things other than investment, which will get tied up in large investments. Also it gets you used to the idea of setting aside a certain sum of money regularly. Monthly and quarterly investment options, where a certain fixed sum gets debited from one’s account regularly is a fine approach to take.

Spread your investment: That you don’t put all your eggs in one basket, applies to investment more than it applies anywhere else. Taking care to spread one’s investments over a diverse range of options will both reduce your exposure to risks and optimize your long term returns. You will be better inured against downturns in any specific sectors. So even if a part of your investments takes a temporary hit, there will be the other part still working well for you.

Track your investments: Your investments come out of your hard earned money, and you should therefore track them with a hawk’s eye. An annual appraisal, either with the help of a finance industry professional or on one’s own is very much in order to see that one’s investment objectives remain on track. There is nothing that stops you from recasting your goals in light of the changes one goes through in life over a period of time. These may be on account of personal milestones like marriage, children’s education, impending retirements or even the prevailing market situation. The idea is to guard one’s money zealously and make every penny count.

Make the right kind of investment: One needs to make different kinds of investments for the short term and the long term. Short term investments need to be less risk averse and easily encashable. The latter type of investment on the other hand need be of the late maturing growth oriented type.

Sound investment may not be rocket science, but one would be amazed at how often people, who should know better make a hash of things. The above steps can be used as basic template for sound investment. As one goes along the path of planned and systematic investment one is better able to understand the finer nuances and nitty gritty of the process and obtain optimal results.

8 Top Tips When Buying an Investment Property

In most countries, purchasing an investment property continues to be one of the most popular ways to invest. The goal of this investment should be to provide you financial freedom and enhance wealth. The problem is many believe that once they get into the venture, it will be a guaranteed, easy success.

It is vital you learn how to effectively manage your investment as this will determine whether or not the investment can help you achieve your financial goals. Below are a few tips when buying an investment property:

1. Choosing the ideal property at the right price

Purchasing an investment property at the right price is highly critical. It is all about the capital growth when it comes to investing in a property so make sure to choose a property that has a high potential of increasing in value.

Always do research. Find out as much as you can about what is selling in a certain area. The more you learn, the more you become skilled in determining the property that is worth investing on. In other words, you will know a bargain when you see it.

If you want to acquire valuable data on various locations and properties, get information from lenders and insurers as they have data that can help you avoid selecting the wrong investment property.

2. Do Your Computations

You should consider property investment as a means of long term type of investment. As this is the case, you need to ensure that you have the budget to maintain your mortgage repayments over the long-term. It is not right to sell your investment property when you are not good and ready since if you are to encounter any financial problems then you might be forced to dispose of the property at the wrong time.

It is less expensive to keep an investment property and service the loan once you already own the property. This is because you can get rental payments as well as tax deductions on several of the expenses connected with property ownership. Things will become easier along the way especially that as rent tend to increase over time so will your income.

Learn the taxes involved in property investment and include this in your budget. Seek advice from your accountant and learn about stamp duty, capital gains tax and land tax. While interest rates can change over time, as the owner, you can always increase the rental fee to cope with the expenses.

3. Get a Reliable Property Manager

Usually, a property manager is a licensed real estate agent whose job is to make sure that things are in order for you and your renter. Your agent can provide you advice, assist you in managing your tenants and help you get the best value for your property.

Your agent should be able to teach you about property law as well as the rights and responsibilities of both you and your tenants. The agent can also handle maintenance problems. Except for other emergency repairs, the maintenance costs should get your approval first in advance. Your agent can also assist in finding the right tenants, do background checks as well as make sure tenants pay rent on time.

4. Understand the market and the dynamics where you are buying.

Search for other properties available in your current area and talk with as many real estate agents and locals as you can. Only get advice from professionals you can trust and make sure to do the leg work. You can use the information in this site to view demographics, average rents, property values, and suburb reports.

It will be to your advantage to know about the changes that are planned or are happening in your suburb. For example, knowing about the planned by-pass may quickly enhance the value of your property as this means traffic in the area may reduce.

5. Pick the right type of mortgage to suit you.

There are a lot of financing options for an investment property. Seek advice in this area to find the option that will be in favour to your financial status.

While the interest on an investment property loan is usually deductible, some borrowing costs are not easily deductible. Appropriately structuring your loan is vital and it is best that you seek help from a trustworthy financial advisor about this.

When choosing between a fixed rate loan and a variable rate loan, go with the loan that is in favour with your circumstance. Carefully consider both options before you decide. For example, as a variable rate loan can become cheaper overtime, choosing a fixed rate loan at the appropriate time can really be beneficial.

Rather than principal and interest, a majority of the investment loans should be created as ‘interest only’ as it can enhance the effectiveness of the tax of your investment especially for a home loan. An ‘interest only’ loan is better compared to principal and interest loan when it comes to investment property since it causes your negative gearing benefit to decrease as you pay down your loan.

6. Examine the age and condition of the property and facilities.

The condition of your property and facilities can highly affect the profit of your investment. It is vital, that before making a purchase, you hire a professional property inspector to perform comprehensive inspection of the property in order to detect potential issues earlier.

7. Make the property attractive to tenants

Choose neutral tones and make sure that your property’s kitchen and bathroom is in good condition. An attractive property can attract better quality tenants. When it comes to purchasing a property, do not only consider what you think is attractive to you. What is attractive to you may not be attractive to some. Remember, that the investment property will be the home of your tenant and not your own.

8. Take a long-term view and manage your risks

Think of property investment as a long term investment and understand that property prices do not rise right away. The longer you can commit to a property, the better. When you build up equity then you can decide to purchase your second investment property. Avoid being greedy and balance your goal of financial stability and in enjoying your current life.