Careerbuilder released a study yesterday on the plight of workers living paycheck to paycheck. It isn’t pretty. Fully 47 percent of all workers surveyed said they’re living paycheck to paycheck and 25 percent save absolutely nothing each month. Astoundingly, one in ten workers surveyed reported making over $100,000 but put NO money into savings each month and do not participate in their company’s 401k, or have a Roth IRA or any comparable retirement plan.
No wonder so many people are asking for a mortgage bailout. They’re spending every dime they make and they’re probably spending it on stuff that won’t last more than a year or two!
Remember that debt is slavery, control the spending, consider ways to make extra money, and you’ll be able to have some excess cash to start your own investment portfolio. So, if you’ve made those adjustments and you’ve found that you DO have a little left over, now’s your chance to begin investing.
There are some basic principles of investing that EVERYONE should remember and exploit to the fullest. Remember, these are just the basics:
1. Tomorrow Will NEVER Get Here
Live in the now. The attitude that “better opportunities are just around the corner” will leave you in the dust. Take action NOW. You already know that the older you get, the less time you have for your money to grow — so get started!
You’ll never pick the exact bottom to get in, nor will you pick the exact crest to get out of the market. If you could perfectly time your getting in and getting out, wouldn’t you and countless others have a huge bank account today?
Live in the present, not the future.
2. Use Every Free Penny You Can
People who have jobs where the employer matches their retirement contributions are crazy, stark raving mad, if they don’t take full advantage of the thousands of dollars of free money that is waiting on them. Those cookies are on the bottom shelf!
3. Extinguish Your Short Term Thinking
Don’t look at your investment portfolio’s performance more than once a week, preferably only once a month. When you’re putting your hard earned money into sound investments, is there anything that could happen on a more frequent basis that would destroy the value of your investment? No. The only thing you get from looking at your investment portfolio too often is an ulcer. Markets frequently move up nd down. That’s called volatility and every market has it. When investing it is key to remember the long-term. Just because we are in a horrible market right now, that doesn’t mean we will be in one 3, 5, or 10 years from now.
Long-term, the general rule is that your diversified investment portfolio value will increase, so NOW is the time to invest! Many investments have been beaten up over the last couple of months, and although some may continue to head downwards for a time, the long term could prove to be much different.
4. Put Your Investing On Auto Pilot
Setting up your checking account to automatically deposit a set amount into an investment account is one of the easiest and smartest things you can do to secure your future. Additionally, you can schedule your pay increases to get deposited before you can spend them!
The problems people have with automatic deposits are more mental than anything else and it does require a mind shift. There is a fear that they might need those funds sooner than later. In reality, if you’re already making ends meet through proper budgeting and controlled spending, you won’t miss the amounts you’re depositing.
5. Don’t Use “Risk” As An Excuse
Investing isn’t risky in itself. As a matter of fact, it is probably more risky not to invest when you consider the opportunity cost! You have an opportunity to make your money grow and you’re not going to take it? Are you kidding me?
Investing can take many different forms: mutual funds, saving accounts, CD ladders, exchange traded funds, bonds, stocks, businesses, real estate. Depending on your tolerance for risk and volatility, every potential investor can find something that interests them.
6. The Hard Part Is Starting
The most difficult part of investing is taking that first step. Writing that first check and sending it off to open an account is where many people falter in the process. It’s always easier to procrastinate and “give it some thought,” but you will have no success until you begin.
The choices available to you in 20, 30, or 40 years will be dependent on the choices you make today.
7. There Are No Quick Paths To Riches And Wealth
Statistically, there is a 100 percent chance you will not win the lotto jackpot. Chances are you won’t win the investing jackpot either (though you have a much better chance than with the lotto ticket). Investments go up and down, but if you’re properly diversified, your investments will generally increase in value. On the other hand, if you never begin an investment program, your problems will soon begin to add up on their own.
Investing isn’t as hard as you think. You just have to take the next wise step.