The first rule of financial success is simple: don’t save to save – save to invest.
Saving money is a great life goal. Cutting back expenses, controlling your impulse spending, and making sure more of your paycheck is left over at the end of week are great ways to help you achieve financial well-being. You can use that money for something better than your day-to-day wants. But what you do with your savings will make the difference between having a tidy emergency fund and retiring comfortably.
When to Invest
Everyone should save, but should everyone be investing? It depends on your circumstances. There are two scenarios in which good old-fashioned saving may be more appropriate for you than investing:
- You have no emergency fund or savings to speak of.
- You have high-interest debt, such as a line of credit or credit cards to pay off. Pay back debt before you start investing.
How to Invest
There are of options for investing. As a first-time investor, you should go for a basket of assets: mutual funds, bonds, and as your portfolio grows, even market hedges like gold and silver.
It’s important to understand that the assets that promise the highest returns also come with the highest risks. Their values can suddenly and sharply go down; in fact, it’s almost inevitable that they will. Lower yield investments like bonds are more secure, because there is smaller risk to your principle (the money you invest initially).
One sure-fire way to grow your investments is to set up automatic deposits into your investment account. Every month, about 10-15% of your income should be going into your savings and investments.
Investing with Low Risks
Things will start small, but after a decade or two of saving and investing, you can be looking at a substantial net worth. You may want a kind of “insurance” for a market crash. You’re also getting closer to the date you want to withdraw your investments to make that purchase you were planning. The more fixed the date, the higher the risk, i.e., the date you want your money could be the day the market tanks.
You can reduce risks by investing in silver and gold. Precious metals are conservative assets that should take up a larger share of your asset allocation as you reach the date you want to withdraw cash. Gold and silver are better versions of cash in that they don’t carry the same risks as stocks, but they appreciate in value and are unaffected by inflation. That’s the main value to saving with silver; while inflation eats away at dollars in the bank, silver prices are like a buoy that floats upward with inflation.
If you have an investment goal that’s fast approaching, learn more about investing in silver and gold as a way to transition back into savings without losing purchasing power to inflation. Don’t lose out on the hard work your money has done for you.
Saving money is the first step toward financial freedom, but don’t let that money sit in the bank. Invest your money and watch it grow.
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