(MoneyHippo.com) – Stepping into the world of investing can be intimidating, and leaving your money in your local bank for safekeeping may seem tempting. Unfortunately, banks don’t offer much growth, and the only way to build your wealth is to brave the uncharted waters of the investment world. To succeed in this new venture, you need a strategy. Here are three of them to get you started.
- Invest Early: Time is the most significant advantage you can give yourself in the market. The sooner you start, the better your chances of growth. Sure, the market will go up and down, but the overall stock market ends up in a positive position. Time allows you the grace to weather a down market and compounds the gains to earn exponential increases.
- Choose Index Funds: Invest most of your cash in index funds and maybe choose a few stocks for investing. This strategy keeps things easy and gives you less to monitor. Index funds already contain hundreds of the best companies globally, and a professional tasked with making sure investors see positive returns over time manages the fund. If you choose to take some funds and invest in a few companies, do your research and make sure they are businesses you believe will survive over the long term.
- Keep It Dull: Seeing huge gains in your portfolio or bounces in the market might tempt you to sell when the market’s hot and buy when it cools down. Yet, your best strategy is to buy and hold for at least one year. Taking gains for stocks or assets you keep for less than 12 months will result in a capital gains tax assessment equal to your ordinary income tax rate. Plus, pulling your money out will rob you of compounding interest. Long-term gains taxes are much more favorable when it’s time to pay Uncle Sam.
By incorporating these simple strategies and buying regularly, you could watch your money grow more than you ever thought possible.
Copyright 2022, MoneyHippo.com