GROW YOUR MONEY in 2024 : Investing 101 Ph | Investing Basics and Self Assessment

Summary

In this informative video, Charm from Ready to Adopt discusses the fundamentals of investing, emphasizing its role as a tool for achieving financial goals rather than just a means to acquire wealth. She covers key topics such as combating inflation, the power of compounding interest, and understanding personal investment profiles, including time horizons and risk tolerance. The video explains different types of investments, earning mechanisms, and strategies like diversification. Ultimately, Charm encourages viewers to start investing early, prioritize financial literacy, and actively manage their portfolios to build long-term wealth.

Takeaways

• 💡 Investing is about putting money to work to achieve financial goals, not just accumulating wealth.
• 📈 Inflation decreases the value of money over time, making investing essential to preserve purchasing power.
• 🔄 Compounding interest can significantly grow investments over time; starting early maximizes this effect.
• 🕒 Understanding your time horizon (short, medium, long term) is crucial for investment strategy.
• ⚖️ Different risk levels (conservative to aggressive) cater to various investor personalities and goals.
• 🎯 Clearly defining your investment goals helps in determining your strategy and necessary savings.
• 💰 It’s advisable to invest 20-30% of your income, starting small if necessary.
• ⏳ The best time to invest is as early as possible, but avoid investing without an emergency fund.
• 🏢 Investments can be categorized into lending (e.g., bonds) and ownership (e.g., stocks, real estate).
• 🛠️ Diversification and long-term investing are key strategies to mitigate risk and enhance returns.

Q & A

What is the primary focus of the video?

The video focuses on understanding investing as a tool for achieving financial goals, explaining its importance and various aspects.

Why is it important to invest rather than just save?

Investing is crucial because inflation decreases the value of money over time. Money kept in low-interest savings can lose value, while investing can help it grow.

What are the three main reasons to invest mentioned in the video?

The three reasons are: to combat inflation, to benefit from compounding interest, and to make money work for you to achieve financial goals.

What is compounding interest, and why is it beneficial?

Compounding interest is earning interest on both the principal and the accumulated interest. It allows investments to grow significantly over time, especially when started early.

How should investors determine their investment personality?

Investors should assess their time horizon, risk level, specific financial goals, and budget to understand their investment personality and preferences.

What types of investments are categorized as lending and ownership?

Lending investments include bonds and savings accounts, while ownership investments encompass stocks, real estate, and businesses.

What is the recommended percentage of income to invest?

It is recommended to invest around 20-30% of your income, but beginners can start with as little as 3-5% and gradually increase their contributions.

When is the right time to start investing?

The right time to invest is as early as possible, provided you have an emergency fund and are not burdened by high-interest debt.

What strategies can help mitigate risk in investing?

Diversification across different asset classes and risk levels, as well as using dollar-cost averaging, can help reduce risk and enhance potential returns.

What are some ways to earn from investments?

Investments can generate earnings through interest income, dividend distributions, and capital gains from the appreciation of assets.