There are some points in our lives when we have some money that we have no immediate use of i.e. extra cash. When you get such money, what do you do with them? It has been said in many places and in many ways that one must rather invest his or her money rather than just saving it, but how to do this and where is not always emphasised. Do you have some extra cash that you intend to invest, but do not know how to? This article is written to guide you.
Don’t Catch A Falling Knife – You may want to invest your money quickly so not to eventually spend it while waiting, but at the same time, you shouldn’t rush to invest in just anything. Yes, it is extra cash, but it is not less valuable. If you rush into investments without proper knowledge and research, you may be investing in a loss or falling/failing market. Which is the easiest way to lose your money.
Try Not To Be In A Hurry To Get Rich – It is extra money anyways, so you should not treat it like a life line. However, you must be patient enough to make sure you are not investing in a high yield investment program that may eventually crash. Long term investments are the best and you must be patient to find the one that is just right for you. HYIPs may be very good to make quick cash, but research has it that up to 80% of them do not last and are not reliable. This is why you must, for security and safety purposes, invest in better long term investments that will yield little but stable cash continuously, over a long period of time.
Use Dollar Cost Averaging – This simply means that you do not buy all the investment you want at once. It may be advisable to use this technique depending of some various factors such as a continuous fall in value or price. When this happens and you buy a certain amount of shares in a stock, you can buy more if or when the price falls further. Dollar cost averaging is advised because no one can say for sure, what will be the situation of the market in future. So, it is better to carefully invest your money in bits rather than at once.
Invest In Defensive Stock – Especially when the market does not seem very favorable, one should invest in defensive stocks. Defensive stocks are stocks that are known to survive trials and challenging times in the market. They include food and beverage companies, healthcare companies, etc., that will naturally do well during general hard times. Defensive stocks pay dividends and they are very advisable and productive for long term investments.
You can decide to save your money, but you may save for years and not make anything significant out of your savings. It may even depreciate with time. It is therefore advised that you invest your money in places where returns and increment is guaranteed.