How Understanding Modern Investment Strategies Benefit Your Personal Growth

In recent years, people have shifted the way people view investing. No longer is investing seen as something that only wealthy people do. Instead, modern investment strategies are seen as a way for anyone to grow their wealth.

With the advent of cryptocurrencies and commission-free brokerage companies like Robinhood, it has become easier than ever before to plan and prepare for your twilight years. This post is designed to provide modern and time-tested methods to get your money working for you.

The Importance Of Investing Your Money

Investing money is one of the most important things you’ll do in your lifetime. It can be challenging to start investing, but it will be worth it in the long run. You should start by saving money and then learning about different ways to invest your savings.

Nevertheless, investing can be difficult if you don’t know where to start. There are many kinds of investment, and it can be hard to know which is best for you and your needs.

From stocks and shares to learning which crypto platforms are best for your circumstances, you can read more here for more information about one of the most popular exchanges.

Fortunately, most investment strategies have modern solutions to help you with your goals. Despite all of that, you still need to learn about some of the most common ways to grow your wealth so that you can become financially independent…

Begin At The Beginning!

While that heading might be a little underwhelming at first glance, you need to begin somewhere if you are genuinely serious about investing in your future.

As the King said to Alice in Lewis Carroll’s famous novel, “begin at the beginning”! In practice, this refers to setting out your time horizons and considering what you want to get out of your investments. This could range from:

  • Creating a nest egg
  • Saving for a significant event in the future (wedding, college, new home, etc.)
  • Developing an income-generating portfolio 
  • You merely want to become more prudent

Nonetheless, what all of these points have in common is that you need to understand and set a reasonable time horizon.

What’s A Time Horizon?

An investment time horizon is the length of time during which an investor plans to hold a particular investment. Investment time horizons are typically classified as:

  1. Short-term: Investments with a horizon of fewer than five years are generally considered short-term investments.
  2. Mid-term: Any investment you plan on holding for at least five to ten years is mid-term.
  3. Long-term: A long-term investment horizon refers to investments that will be held for ten, twenty or even thirty years.

Although the time horizon you set for yourself will depend on your goals and circumstances, longer-term investments tend to benefit from compounding and generate enormous wealth over time.

Compounding?

The compound growth of your investment occurs when the interest you earn on it is added to the original amount, which in turn earns interest. Imagine doubling a penny every day for a month. By the fourth day, you will only have 8 cents. However, if you keep at it, you will have over $5 million by the end of the month! While this form of investment is obviously unfeasible, it does illustrate the benefits of compounding.

Strategies To Grow Your Personal Wealth

After learning what investing is and why you should get involved, you probably still wonder how to begin. Let’s start with the investment that has exploded on the scene in the past decade.

Cryptocurrencies

Cryptocurrency investment is a new form of investment introduced in recent years. Investors can invest in cryptocurrency by buying coins and tokens or mining them. Despite recent setbacks, it retains many solid fundamentals and is still part of most people’s portfolios. Essentially, it is the underlying technology that makes a token valuable or not. If you are interested in investing in this exciting new trend, there are some things to be aware of, including:

  • Keep it under 5% of your total portfolio
  • Make sure you invest only what you can afford to lose 
  • Thoroughly research the company and team behind every token
  • Try to invest in established tokens like ETH and BTC
  • Stay well clear of meme coins
  • Use reputable exchanges

Company Stocks

Although arguably not as exciting or prone to explosive bouts of wealth generation as crypto has been, it remains the stalwart of any investment strategy, and for a good reason. In the context of finance, stocks are securities that represent shares in the ownership of a company. They can be bought and sold on stock exchanges or, more recently, via commission-free, app-only brokerages. Stock prices fluctuate with changes in the company’s value. When investing in stocks, there are a few things to keep in mind:

  • Avoid meme stocks
  • Keep a diverse portfolio of companies
  • Remember that you are buying shares of actual companies that employ real people
  • Always do your own research before blindly accepting advice (this is true for all investment opportunities)
  • Make sure you read the small print of your broker

Understanding modern investment strategies, particularly the various types of equity funds and cryptocurrencies, can help you to increase wealth, build your retirement savings and plan for a secure future. However, as with anything in life, ensure you don’t put all your eggs in one basket and always perform due diligence before investing any of your money.

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