15% of Workers Experienced a Salary Reduction in the Past Year. Here Are 4 Ways to Cope With One
Having your salary reduced can have a big impact on your personal finances. Read on for ways to manage lowered wages.
Did you know that June 4 is National Cheese Day in the United States? If you didn’t, you’re not provolone.
Now, if you were hole-y unaware of one of the feta days on the calendar, you may not have plans to celebrate yet. So, why not take this national cheese day as an opportunity to check out some investing tips that can help you make more cheddar.
I promise, this is nacho ordinary list of puns — following this advice really can make you a sharper investor, even if it’s a little cheesy.
Image source: Getty Images.
1. Want to make gouda in the market? Invest in what you know
Before you purchase any investment, it’s crucial you understand a few key things about it:
How does it make money?
What are the risks?
How does it fit into your portfolio?
The more knowledgeable you become about different assets before investing, the greater the chances your portfolio will perform well.
If, on the other hand, you’re investing blindly or following advice you read on social media, there’s an outsize risk you’ll either get scammed or lose money simply because you don’t know exactly when to buy or sell or how to assess any particular investment.
There are an ever-growing number of different assets out there to invest in, including a host of new cryptocurrencies. If you’re interested, take the time to become an expert in stocks, bonds, mutual funds, crypto, or a host of other asset classes. If you aren’t, you can take the simple route and invest in ETFs that track the performance of the market as a whole.
But whatever, you do, make sure you really know what you’re putting your money into. Otherwise, you could end up feeling very bleu when you find yourself losing money.
2. Don’t put money in the market if you camembert the risk
When you invest, there’s an inverse relationship between risk and potential returns. Taking some risk is necessary to earn a reasonable rate of return. After all, if you just stick your money in savings accounts, you probably aren’t even going to keep pace with inflation.
But you need to carefully assess the level of risk you’re taking before you put your money on the line. Your age, the amount of money you have available, and your general comfort level with seeing your portfolio balance decline (even temporarily) are all going to play a big role in determining that ideal mix of assets for you.
And as you get older, you should become more conservative in your investments. But when you’re younger, err on the side of taking more chances since you have more time for riskier bets to pan out. That’s why the common advice is to subtract your age from 110 and put that percentage of your portfolio into the stock market.
While this rule of thumb is a good asset-allocation shortcut, if you wheeley want to rockette when it comes to asset allocation, remember that you know your own rind better than anyone. Take the time to develop an individualized asset allocation strategy based on your personal investment goals.
3. Don’t invest money you’ll need soon in queso a crash
Even good investments can take a hit during a stock market crash. And no one can reliably predict when those will occur or how long they’ll last.
If you can hold on to your investments through a downturn, the inevitable recovery that follows should hopefully mean you won’t actually lose any money (except temporarily, on paper). But if you are forced to sell at an inopportune moment, you could end up locking in losses.
To reduce the chances of being forced to sell at a loss, avoid investing money you’ll need within the next two to five years or so. Just as good cheese often needs time to age, your portfolio may need a little while to perform up to your expectations. Make sure you can give it that time.
4. Build a diversified portfolio and let it brie
Finally, aim to invest in assets that you’d be comfortable holding for the long term.
Trying to day-trade or get in and out of stocks to make a short-term profit is rarely successful. Instead, the best strategy for building wealth is to build a portfolio with a solid mix of different investments you believe will do well for decades, and then just leave your money alone.
By following these four tips, you should hopefully become a feta investor than ever before. Because unlike a block of Swiss, there are no holes in these stratacheese.
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