4 Smart Ways to Invest Your Money While You Are Single
There’s no time like the present to start thinking about the future. The earlier you start investing, the more time your investments have to build.
Emergency Fund
Starting an emergency fund must be your first priority. Calculate your monthly expenses and multiply them by six to see how much you need to stay afloat six months or if you prefer a year. Save that much money. If you lose your job, need emergency car repairs, or have unexpected large medical bills to pay off and the like, you won’t have to scramble. Setting a little money aside every week helps. Even $5 or $20 accumulates. Use savings or money market accounts to build interest on that cash.
The Most Effective Places
Buying a house is one of the best investments, although it does come with some risk. Renting equates to giving money away while home ownership lets you build equity. You can often sell your home for more than you paid for it—sometimes by tens of thousands of dollars. Since you are single, consider townhouses or condominiums. They usually cost less than standalone homes. Shoot for a 20 percent down payment.
A retirement plan is the other most effective place you can invest your money. There are many different kinds of retirement plans out there that can be tailored to your needs. If you work for an employer, take full advantage of matching programs. You can also look into traditional IRAs, Roth IRAs, rollover IRAs, stocks, bonds, and mutual funds or even a simple 401K to help you save up for retirement. You’ll likely have years for that money to grow for retirement and any of the previous ideas will work to help you prepare and save for the time that you do retire. If you are self-employed, there are plenty of retirement plans tailored toward that as well.
CDs and Other Investments
Once you have your emergency fund squared away, CDs and Treasuries are low-risk investments with low returns. If you want something with higher returns and are okay with more risk, you can supplement your retirement investments with additional stock market investments. Keep in mind though that playing the stock market is one of the most risky investments you can make depending how much of your money that you put into it. If you are not careful and put too much money into stocks, you could potentially lose a lot if not all of your money, but you can also gain a lot of money through them as well. Remember the trick of buying into stocks when they are low and trying to sell them when they are high and you will get a larger return on your investment. With that said, if you have your money invested into stocks, pay close attention to them so you either don’t miss that opportunity to get that large return on your investment or so you can save as much money as you can on a bad investment.
Pay Off Debt
Getting rid of debt might not seem like an investment, but it certainly is. Paying interest redirects money that otherwise would go toward investments. For example, if you pay hundreds of dollars in credit card interest a year, that’s hundreds of dollars that could go to a CD, IRA, stock, or other mutual fund. Whittling down debt frees your cash for investments.
There are two ways to look at paying off debt: start with the lowest amount owed or the highest interest rate. The highest interest rate saves more money in the long run, but it may be more psychologically satisfying and motivating to see debts go down one by one.
Realize that you don’t have to pay of your debt alone. There are companies out there like creditrepair.com/reviews along with other companies that can help you pay off your debts and assist you with late payments.
The basis of wise investments is a secure foundation, so build that emergency fund. Make sure you can afford a house down payment to avoid paying private mortgage insurance. Also, make sure you don’t forget to invest in your own retirement or make other investments that may be right for you and your financial needs.
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Category: Investing
