Did you ever look at a stock, consider buying it, then buy something else only to see the first stock skyrocketing?
What about people who bought Tesla for three times the amount because they were promised it would be able to Uber while they sleep, only to see nothing of it today?
Sometimes, even with the money, it’s hard to figure out what to do with it. How do you avoid missing opportunities, protect your assets, and grow your wealth?
How to figure out what’s best for your money?
Now, while we can’t give you a straight answer to this question (whoever promises something like that is clearly lying), we can do something nearly as good. We could offer you a few suggestions to help guide you through this decision-making process. With this, the next time there’s an opportunity, you’ll have a simple and clear methodology to figure out how to handle your assets.
Here are some such tips.
1. Consider if something else might be (currently) better
Just because you have the money doesn’t mean that investing it right away is the best way to go.
For instance, what if you have a credit card with a pretty high interest that you could pay off right away? What if you have won so much money on the lottery that you could immediately pay off your mortgage?
Then, what if you don’t have an emergency fund? The thing is that the emergency fund needs to have the value of 1-3 months of living expenses. This means that it won’t cancel or replace your financial plans but merely postpone them a bit.
Chances are that all of these things are a pretty good way to spend your money and that, if you resolve them right away, you stand to gain quite a bit in the future.
Don’t get us wrong; we don’t mean that you should never invest if you have any debt. This kind of suggestion is outright ridiculous; however, you might want to reevaluate your priorities and consider what suits you more in the long run.
Also, finances are not strictly mathematical. Some people feel financial pressure far harder than others. This means that setting up an emergency fund might reduce the stress that you’re currently feeling. Wouldn’t this be worth your money, as well?
2. Learn how to research your investments
The next thing you need to do is research your potential investments. First, try to learn as many technical terms as you can. This is a prerequisite to understanding the subject, but it’s also simple in the modern world. You can also always look up the term you’ve skipped or forgotten.
Next, you need to analyze the historical performance of your investing asset. Of course, you don’t have to go way back. For instance, you don’t care about the gold inflation during the Middle Ages. All you want to see is how these precious metals performed over the last few years.
Now, it’s also important to understand that charts have recurring patterns. Believe it or not, a pattern will recur; if you study these charts thoroughly enough, you might be able to recognize it.
Another thing you could try is copy-trading. This is when you notice a skillful trader and set up your platform to emulate their trades. This is far from fail-proof, but it gives you time to study their strategies on real examples.
You also want to find your preferred source of information. There are a lot of blogs out there; some are dedicated to your asset of choice. By paying close attention to this blog, you can have a reliable source of news or information.
3. Set aside a small amount of money for risky, lucrative investments
Some investment opportunities are risky but lucrative. You must learn how to spot these opportunities and put some money there.
Keep in mind that, more likely than not, you’ll lose money here. So, set aside the amount that you can afford to lose. A winning combination is to put most of your money (90-95%) of your investment into the biggest, strongest financial establishments out there but put the rest in the riskiest venues.
Depending on your courage, you can put anywhere from 2-3% up to 10%.
Now, the big question you have to ask is “what can I get for such a minuscule investment?” The truth is quite a bit, provided that you find the right investment opportunities. For example, you could buy some crypto. Some of the cheapest options can cost you as little as a few cents per coin. How much can this earn you in the future?
Well, Erik Finman bought 100 BTC when they were $12 each and started selling when their value reached $27k. While this proportion may seem impossible to emulate, you can make a fortune by recognizing the right coin.
Just imagine if you had an opportunity to buy Microsoft or Apple stocks early on. Even just a few would amount to a fortune today.
4. Learn how to diversify your resources
Diversifying your resources is incredibly important. However, a lot of people take the lazy approach of just going for some crypto. A well-balanced portfolio has more than just crypto.
Why do we diversify, to begin with? Imagine if you knew which stock would grow the most. What would you do? Probably put all your money into that stock and then some. Some people would even sell their homes to have more to invest.
However, what if someone told you this stock has a 50% chance of blowing up? Would you still sell your home to invest in it? Well, some people might, but the majority would see this as too much of a risk.
The truth is that no one is a fortune-teller, and no one can tell which asset will grow and which will diminish in value. So, people spread their investment money all over.
Again, not all assets are as risky, meaning you can’t just take ten assets and put 10% of your total investment money in each. You can, but this is not a very sensible strategy. The key point is that you manage the risks and look for a way to create a balanced portfolio. This is really the best way to protect your assets in the long run.
5. Leveraging technology to help you out
The benefits of rapid technological advancement are too great to be ignored. First of all, with the help of the modern state of AI tools, the computing power behind so many analytical platforms is just too great to be ignored. Today, you can feed some data into a platform and set it up to monitor a certain asset in order to update the analysis in real time. This is hardly a new concept, but the level of accuracy surpasses anything we’ve seen in the past.
Second, depending on the asset you’re working with, you need the right exchange. Most of these exchanges have a mobile app, meaning you can receive real-time notifications every time something new happens.
Besides this, you can also set stop orders to execute trades automatically, which means you’ll get an edge in speed. Your order will be executed as soon as the specified conditions are met. This is a failsafe that a lot of people are still not using right.
Figuring out what to do with your money is a major decision
When it comes to figuring out your finances, most people assume that the lack of money is the problem. While this is undoubtedly true, sometimes, not knowing what to do with an excess of cash can be just as confusing. Fortunately, now you understand what you’re up against and might have a more accurate decision-making process next time.