Time is Your Best Asset |
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By: Mika Hamilton Posted: 2006-10-15 02:42:14 |
| When successful investors are asked what their secret to success is, they often answer “time”. An investor's life is not static. An investor works, plays, and grows old. As they grow older their income increases and investments change. Unfortunately, that means when you have the most income you have the least amount of time to invest. That is why time is extremely important in developing a solid financial plan. An investor's life can be divided up into four sections much like the seasons of the year. In each particular section there are specific actions which much be taken to be a successful investor.The first section begins when you are young and do not have enough excess income to devote to investing each month. You may only have $20 dollars to spare. It is important to save and invest even small amounts of money regularly because over time it will add up. However, the young investor has limited choices. Most banks will allow you to make a small investment, with little or no fees, in a mutual fund. While you could afford saving bonds they offer very little return on the money originally invested. This is great time to learn and discover. This time should be spent researching companies, learning to read a balance sheet, practicing picking stocks, and monitoring their growth. Time is truly an asset because it gives you the ability to get your feet wet in investing without the risk of losing too much moneyThe next step is when your disposable income increases and you have the ability to give $500 dollars a month to investments. This is great time to check out index funds, discount brokerages, and create an investment portfolio. Usually your disposable income is much higher then your actual expenses. This allows you to invest a larger portion of your money in high risk and hopefully high return stock vehicles. It is during this time that you acquire enough money to set your financial plan into motion. Investing is a long term activity, and only with time (and patience) will your money continue to growth and reach your financial goals. If you are lucky you may even be able to retire early.Now you are in the prime earning years of your life. Which is good because this is also the most expensive period of your life. It is during this time that you are buying a new home, cars, and having children. While this is an exciting time it can also create a great deal of debt. Any type of debt must be paid down , diligently, so retirement can be as worry free as possible. It is during this step that your financial plan will shift. Money made from high risk investing can be placed into more stable (constant earners) stock. If you have prepared well and used your time correctly in the previous steps, you should be making a substantial profit while still continuing to invest and show growth in your investment portfolio.All these steps will lead up to retirement. If you have planned and used your time well, this will be a time of relaxation, no stress, and hopefully adventure – enjoying the fruits of your labor. It is important to point out, that if you want to be a successful investor you must utilize all the time you have. Even if you have started investing late, you can make what money and time you have work hard for your future. |
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