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Saving Vs. Investing: Understanding The Difference

When it comes to money, the decision to save or invest is generally based on a person’s personality type.

Some people are risk-averse and don’t want to take a chance on any potential loss in capital, while others are more aggressive and would rather have a better opportunity for growth.

While there is no right answer for everyone, it is important to understand the differences between saving and investing so you can choose which option best suits your needs.

This article will discuss the difference between these two types of financial management and how to use them effectively!

The Difference Between Saving & Investing

Saving is the act of making sure money doesn’t run out in your life. Saving is an act of protecting your money while investing involves exposing yourself to risk.

Investing is different because it’s about making more money to live a better lifestyle or retire earlier.

Why is it Important to Understand the Difference to Make Smart Decisions with Your Money?

By understanding the difference between saving and investing, you can make better decisions about what you do with your money.

Understanding what each one means could help you prepare for retirement and give you a good idea of how much to save to reach those financial goals.

Most people who want wealth over time would need both savings and investment strategies that work together synergistically.

Typically these two strategies should balance themselves out because if someone isn’t taking any chances by being aggressive with their investments, they won’t grow the money in time to use it once they have retired.

Saving is crucial because you need a cash cushion for emergencies but investing helps provide that extra income after retirement. Your savings will last longer than just relying on your social security benefits or pension plans.

When choosing between saving and investing, most experts recommend using both strategies together instead of one over the other.

Suppose someone doesn’t take chances with investment opportunities available to them. In that case, there’s no chance they’ll be able to retire early if all their money is stuck in bank accounts without any growth potential whatsoever.

One clear difference between these two financial tools is that some people prefer risk while others do not want to have to worry about any possible loss of capital.

Benefits of Saving

Saving is a great way to set aside money for the future.

You can save your hard-earned cash and build up a savings account, so you have something to fall back on if anything happens in your life that requires extra funds, such as when someone loses their job or there’s an unexpected medical bill that needs paying.

When saving, it doesn’t take much effort from anyone because all they need to do is make sure not too much money slips through their fingers each month by making regular deposits into their bank accounts.

It’ll usually take years before people can accumulate a good amount of savings, but once they reach this point, it means less stress and more peace of mind as long as they don’t touch the money because it’s there for a rainy day.

People who save typically have nothing to worry about when something happens unexpectedly as funds are already set aside now instead of waiting until later down the road where it might be too late due to financial mismanagement.

How to Save Your Money?

People can save by putting money into their savings account every time they receive a pay check.

One good way to save your money is by opening an everyday or high yield checking account that allows you access to the funds anytime needed and has low fees for withdrawing and depositing cash whenever necessary.

This way, people won’t be tempted to spend all of it at once because other withdrawal limitations depend on what type of checking account someone opts for.

Since saving involves doing whatever possible not to go over budget each month, some banks like Ally Bank even offer online tools where anyone can quickly see how much extra money they can put aside without affecting lifestyle whatsoever.

Benefits of Investing

Investing is an excellent way to make your money work harder than you do.

Once people learn how this process works, it can change their lives forever if done correctly over time or even sooner, depending on how much capital someone decides to put at risk not to lose everything but still grow some wealth from investments made that way.

Nowadays, kids are also practicing the art of investing. Parents are setting investment accounts for kids to invest in. You can start with a very small investment until you master this art.

One needs patience and the ability to look at long-term trends to see how their investment choices are faring over time, so they don’t lose all of what they put into an investment where there’s no chance for recovery or growth.

It takes more than just putting money away blindly without any thought as to whether this might turn out well or not because that’s gambling, not investing.

If you want your savings account to grow faster than inflation, then invest them instead of just putting them in a regular savings account.

It’s important to note that investing involves risks, resulting in capital loss, especially in the short term.

This is why it’s important to invest money that you can afford to lose since there are no guarantees when investing.

Conclusion:

While saving may require less work, investing takes more time but also has growth potential.

If one invests successfully over the years, there’s no telling how much money could be made with compounding interest or other investment opportunities that might present themselves along the way.

It is important to note that while some individuals prefer investing because of its unlimited earning potential.

Others are hesitant about this route since their capital could be lost altogether due to market conditions or poor timing on decisions surrounding investment strategies.

3 Reasons to Buy Cryptocurrency in 2021

What is cryptocurrency? Cryptocurrency is a collection of binary data which is designed to work as a medium of exchange where individual coin ownership records are stored in a digital ledger which is a computerised database using strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership.

1. It Has Never Been Easier To Invest

The prospect of making the leap into cryptocurrency can be a daunting prospect at first. However, times have changed and there is now much more information out there to enable investors to quickly navigate the world of cryptocurrency without many of the previous barriers to entry. Coinbase has a huge network of around 10 million investors and is one of the most popular platforms at present, allowing investors to easily purchase Ethereum, Litecoin and Bitcoin to name a few.

2. The Long Game

As with any investment, you need to keep focused on the long-term viability. If you become obsessed with short-term loss, every variation in price will have you worrying that you’ve made the wrong investment decision. This could cause you to panic sell at a lower price than you bought it for, when in reality, holding until the price recovers, and then went even higher, would have been the more sensible move. The cryptocurrency-market is volatile and price fluctuations will always happen, with some more concerning than others. The recent crash made even the most hardened investors a little hot under the collar, but two weeks later Bitcoin bounced back with predictions of higher price surges in the coming months. You should always be looking at investments over the longer term (5+ years), as this is where the true gains are likely to be made.

3. Digital Currencies Are The Future

Bitcoin has led the way so far with its domination of the cryptocurrency market and it may be the most recognised coins. The moment to reap the largest rewards from Bitcoin has already passed, with those who invested in the unknown coin many years ago having made eye-watering returns. Investors who are looking for those big returns must expand their horizons by investing in alternative coins such as Ethereum and Litecoin, which are two very promising cryptocurrencies. At this point, it is worth noting that with any investment of this kind, the risk remains extremely high and you must be prepared to lose the entire investment. It is therefore only advisable to invest what you are happy to lose, and what is affordable. The road to cryptocurrency-investing success isn’t guaranteed, so it should only form part of a wider portfolio of varied-risk investments. You should also seek independent advice before making new investment decisions.

Advisory Excellence is an international network. With over 1500 members around the globe, we are ready to help you wherever you are in the world.

10 Reasons to Invest in Yucatán

SOURCE: Ministry of Economic Development for the State of Yucatán

By: Thomas Wolff, Mérida, Yucatán, México

Tel: (+52) 9991 09 11 58
Email: [email protected]

1. Strategic location in south-eastern Mexico

Yucatan borders the Gulf of Mexico to the north and west, with 378 km. of beautiful white-sand beaches and crystal-clear waters; it borders Campeche to the southwest, and Quintana Roo to the east and southwest. Merida, the state capital, is the hub of the most-developed business, financial, technology, medical and educational services in the southeast.

In addition, Yucatan has an important advantage due to its proximity to Cancun and the Riviera Maya. This opens an excellent opportunity for companies that set up business in Yucatan, providing an opportunity to be hotel, restaurant, shop and shopping mall suppliers for the area, taking further advantage that installation and operation costs in Yucatan are less than in those regions with high tourist traffic.

2. Considered the safest state in Mexico

It is the safest state in Mexico. Unfortunately, when one hears people talking about Mexico these days, the first thing that springs to mind for a foreigner is unsafe conditions. The fact is that, although there are states in the country with a high level of unsafe conditions, Yucatecans are proud to say that Yucatan, far removed from being one of those states, is even located hundreds of kms. from them.

Yucatan is the safest state of the country, according to the National Survey on Unsafe Conditions (June 2021) (Encuesta Nacional Sobre Inseguridad, or ENSU in Spanish). The index of unsafe conditions in our state is much lower than any other city or place in America and even less than many cities in the United States.

3. Job stability and skilled manpower

Currently the state of Yucatan offers eleven Associate Degree (or Higher Technical Degree) level programs, 221 Bachelor’s Degree programs, 18 Bachelor’s Degree in Education programs, and 100 postgraduate programs.

Source: Universidad Autonoma de Yucatan : Rankings, Fees & Courses Details | Top Universities

Source: All 6 Universities in Merida | Rankings & Reviews 2021 (universityguru.com)

In addition to its skilled workforce, Yucatan offers cheap labour, as it is located in the area of the country offering the lowest minimum wage. With rising labour prices in China, entrepreneurs and investors (in particular those from North America) have once again set their sights on Yucatan, becoming yet one more reason to make the region a compelling place for setting up their businesses.

Source: Mexico Minimum Wage – World Minimum Wage Rates 2021 (minimum-wage.org)

Source: Mexico to Increase Minimum Wage by 15% on January 1 – The Yucatan Times

Source: Employment in Mexico – Yucatan Expatriate Services Yucatan Expatriate Services

4. The Port of Progreso for export and import

Progreso is the most important port in the state, the gateway from anywhere in the world. The base of an important fishing industry and thanks to its impressive Puerto de Altura (a viaduct which delves into the sea some 6.5 km gaining depth and thus enabling large ships to dock), Progreso is a strategic center for exporters and importers, as well as for the arrival of cruise ships.

Source: PUERTO DE PROGRESO. Administración Portuaria Integral de Progreso. (puertosyucatan.com)

Source: Port of PROGRESO (MX PGO) details – Departures, Expected Arrivals and Port Calls | AIS Marine Traffic

Source: Progreso – APM Terminals

5. First-world flight connection network

Yucatan has two airports: Merida’s International Airport “Lic. Manuel Crescencio Rejon y Alcala” is the most important due to the number of passengers it transports and the cargo it handles; the second airport is the recently reopened Chichen Itza International Airport, located in Kaua Yucatan, close to the archaeological site of Chichen Itza.

Yucatan has two direct international flights: one to Miami and one to Houston, the latter is a city from where a traveller can make a connection to virtually anywhere on the map. As if this were not enough, with less than a 2-hour flight to Mexico City, one can connect to not only anywhere in the country but also the world; and 3.5 hours from Merida is the Cancun International Airport where there is an infinite number of direct international flights.

6. Land availability

In Merida as well as other areas of the state you can find a variety of colonial homes and residential developments with all the utilities available (water, electricity, telephone, cable, Internet, etc.). Some of these are private and include parks, golf courses and access to exclusive commercial complexes.

Source: Why Invest in Yucatan – Own Mexico

One of the most recent and exclusive residential developments is the Yucatan Country Club, a real estate project that envisages the construction of homes, artificial lakes, an 18-hole golf course, a PGA-standard Nicklaus Design golf academy (the first of its kind in Latin America), a 5-star hotel and a shopping mall.

Source: Yucatan Country Club (vivecountry.mx)

Source: Yucutan Country Club – Golf in Mexico near Merida (next-golf.com)

In addition to housing and residential developments, there is also land available both in Merida and on the outskirts of the city, as well as in other municipalities of the state.

Source: Yucatan Lands: Properties for sale a round to Valladolid, Yucatan, Mx

Source: Land for Sale in Yucatan – Find Nearby Lots for Sale | Point2 (point2homes.com)

7. An abundance of natural resources

Our state has exotic and beautiful natural attractions, including an extensive beach coastline, from Celestun to El Cuyo. There is a great diversity of flora and fauna, like the famous flamingos; caves such as Loltun and Calcehtok; and the cenotes (underground rivers), reservoirs of fresh, crystal-clear water.

Source: 10 Best Merida Mexico Beaches in the Yucatan Peninsula (traveltomerida.com)

Source: Loltun Cave – Wikipedia

Source: Yucatán – Adventure and nature – Calcehtok Caves | Yucatán.Travel (yucatan.travel)

Source: Yucatán – What to do – Adventure and nature – Yucatán.Travel (yucatan.travel)

All this makes Yucatan the ideal place to spend entire seasons resting and relaxing, or exploring and venturing on an ecotourism tour.

8. A quality of life that is unsurpassable in the country

There is no rush in Yucatan. Life is relished in a very different way than in the cosmopolitan cities in the central region of the country, away from the stress and noise that characterise them. But at the same time, this peace integrates perfectly with an infrastructure of educational and health services unparalleled in the southeast region.

Source: Study by UN-Habitat, Infonavit ranks Mérida No. 1 for quality of life (mexiconewsdaily.com)

Yucatan boasts a wide network of financial services, as well as cultural activities, recreation areas and a wide variety of options to meet the consumer needs of the citizens, like for example, the wide variety of car dealerships that exists in Merida.

Source: 6 Authentic Cultural Activities In Mexico’s Yucatan Peninsula : Epicure & Culture (epicureandculture.com)

9. Access to international markets and export products

Yucatan is the closest point in Mexico to Europe as well as a natural platform for shipping goods to Central America and South America.

Moreover, as mentioned above, the Port of Progreso, which is just 32 km from the city of Merida, opens the door to the world and allows receiving and shipping of all kinds of products for import and export.

10. State support to facilitate setting up new companies

The Ministry of Economic Development offers various incentives and help or assistance targeted at investors interested in the state, including the following:

  • Assistance/Service for investors visiting with a business agenda;
  • Liaison with local businesses to purchase supplies/raw materials;
  • Management facilities for searching and obtaining land and industrial buildings;
  • Orientation and management for obtaining federal, state and municipal permits;
  • Advisory services on funding and government support programs for industrial development;
  • Promotion and organisation for attending national and international events;
  • Other support according to the investment project.

What to consider if you plan to invest in Cyprus

In Cyprus there is a strong business-friendly environment with one of the lowest corporate tax rates in Europe (12.5%, the lowest in Europe together with Ireland). Cyprus is member in the European Union and the eurozone.

Advantages

The geographical position of Cyprus is at the crossroads of three continents, offering access to markets in Europe, the Middle East and the Maghreb. The workforce of Cyprus is multilingual, experienced and inexpensive.

Cyprus has created a high-quality transport and telecommunications infrastructure, particularly in the ports sector and the sectors of tourism, international business and financial services, maritime transport, real estate and intellectual property are particularly developed.

People in Cyprus enjoy an attractive lifestyle in a secure, neat and healthy environment, with a high standard of living.

There is a friendly business environment with solid regulation and legal system aligned with British common law.

Disadvantages

However, the internal market of Cyprus is small with a population of around 1.2 million inhabitants. Cyprus has a high public debt (118.4% of GDP in 2020, IMF) and significant external debt linked to bank deposits of many non-residents. The banking sector is still weakened by the 2009 crisis, despite numerous reforms imposed by the EU, the IMF, and the ECB.

In addition, the Cyprus economy is heavily dependent on Russia and the United Kingdom as export markets and sources of funding with excessive dependence on the service sector (84% of total output), especially tourism, finance, and housing.

FDI in Cyprus

Government has taken measures to motivate FDI. The Cypriot government has created a positive environment for business as proven by its 54th place in the 2020 Doing Business ranking of countries where it is easy to do business. The government’s liberal policies have promoted investment development. Some key points of the country’s appeal are the possibility of 100% foreign shareholding in almost all sectors of the economy, the low corporate tax rate (12.5%), its attractive tax environment (Cyprus has signed double-taxation treaties with over 69 countries) and the low cost of establishing and developing a company.

The country manages to create an attractive environment for investors by strengthening weaknesses in its economy. For example, since 2013, the government has been restructuring the country’s banking sector. This, combined with the recapitalisation, enabled it to avoid bankruptcies and improve stability. Likewise, progress has been made to modernise and make its legal, accounting and banking services more efficient.

Bilateral Investment Conventions Signed by Cyprus has signed bilateral conventions with about 69 countries. Double Tax Treaties define the protection framework of FDIs in Cyprus for each signatory country.

Freedom of business establishment in Cyprus is guaranteed. Acquisition of holdings by foreign investors based in the European Union are free, they can acquire stakes in Cypriot companies, without any limit on the percentage of stake acquired or on minimum capital invested. Moreover, investors from the European Union can acquire up to 100% in the capital of companies listed on Cyprus Stock market except for the banking sector where such a percentage is limited to 50% only. Obligation to Declare Licenses are required when operating in some sectors of the economy, like construction.

Tax incentives

The tax system of Cyprus provides numerous tax incentives to foreign investors, some of them are listed below:

IP Box Tax Regime

Royalty income, embedded income and other qualifying income derived from qualifying intangible assets in the ‘new’ Cyprus intellectual property (IP) box (provision applies with effect from 1 July 2016). 80% of the net profit as calculated using the modified nexus fraction.

  • Royalty income, embedded income and other qualifying income derived from qualifying intangible assets in the ‘old’ Cyprus IP box. 80% of the net profit.
  • Tax amortisation on any expenditure of a capital nature for the development of IP (provision applies with effect from 1 July 2016), Allocated over the lifetime of the IP (maximum period 20 years)

Headquartering

The Holding Company will be holding the general structure and will need a head office in order to cover and perform its activities and its subsidiaries. A combination of the tax benefits of a Cyprus Holding Company along with the stable regulatory framework, low operational costs relating to office rental, office equipment and well-educated English-speaking labour force and exceptional climate and exquisite lifestyle, provide the ideal location for setting up of Headquarters allowing businesses to grow and thrive.

A holding company can set up its headquarters in Cyprus providing an umbrella for all the companies of the Group.

There are incentives offered by the government in order to set up in Cyprus such as the registration of the company as Foreign Interest Company allowing it to employee third country nationals by providing them with work permits.

Eligible Cyprus companies are the ones that:

  • The majority of the company’s shares to be owned by Third-country nationals.
  • Foreign direct investment of capital amounting to at least € 200.000, legally admitted to Cyprus from abroad. This should be proved by an appropriate bank and other documents.
  • To operate in independent offices in Cyprus

The eligible Cyprus holding companies can employ third country national as Directors with minimum acceptable gross monthly salary for Directors is €3872 and the Maximum number of 5 persons for this category.

Middle Management Executives and other key personnel can have a minimum acceptable gross monthly salary for this category is between €1936 – €3871 and the Maximum number of Ten (10) persons for this category.

For employing a greater number of third-country personnel under the above categories, duly justified and documented requests by the company can be submitted.

With regards to the Support staff, please note that there is no maximum number of third-country nationals employed under this category, provided that the necessary approvals from the Department of Labour have been obtained.

Using the above scheme will also give the opportunity and right to the Founder / owner of the company to be relocated in Cyprus and manage the structure through the permanent establishment of the Holding company from Cyprus.

The above relocation can also include Family members that would like to relocate along with the third country national employee.

Shipping

Shipping companies:

The Merchant Shipping Legislation fully approved by the EU (approval extended up to 31 December 2029) provides for exemption from all direct taxes and taxation under tonnage tax regime of qualifying shipowners, charterers and ship-managers, from the operation of qualifying community ships (ships flying a flag of an EU member state or of a country in the European Economic Area) and foreign (non-community) ships (under conditions), in qualifying activities. The legislation allows non community vessels to enter the tonnage tax regime provided the fleet is composed by at least 60% community vessels. If this requirement is not met, then non community vessels can still qualify if certain criteria are met. The legislation includes an “all or nothing” rule, meaning that if a shipowner/ charterer/ ship-manager of a group elects to be taxed under the Tonnage Tax regime, all shipowners/ charterers/ ship-managers of the group should elect the same.

Exemption is also given in relation to the salaries of officers and crew aboard a community qualifying Cyprus ship.

Shipowners

The exemption applies to:

  • profits derived from the use/chartering out of the ships
  • interest income relating to the working capital of the company
  • profits from the disposal of qualifying ships
  • dividends received from the above profits at all distribution levels
  • profit from the disposal of ship-owning companies and its distribution

The exemption also applies to the bareboat charterer of a vessel flying the Cyprus flag under parallel registration Bareboat charter out agreements remain eligible for tonnage tax, with restrictions introduced for bareboat charter agreements to third parties. The legislation provides a definition, as well as a specific list, of what are ancillary services. Moreover, it clarifies that the revenue from the ancillary services may fall under the tonnage tax regime, provided that the income therefrom does not exceed 50% of the total income generated from Maritime Transport Activities (‘Core Activities’).

Charterers

Exemption is given to:

  • profits derived from the operation of chartered in ships
  • interest income relating to the working capital of the company
  • dividends received from the above profits at all distribution levels

The law grants the exemption provided that the option to register for Tonnage Tax is exercised for all vessels and provided a composition requirement is met: at least 25% (reduced to 10% under conditions) of the net tonnage of the vessels owned or bare boat chartered in.

Ship-managers

The exemption covers:

  • Profits from technical and/or crew management
  • Dividends paid out of these profits at all levels of distribution
  • Interest income relating to the working capital of the company

In order to qualify ship-managers must satisfy the following additional

Requirements:

  • Maintain a fully-fledged office in Cyprus with personnel sufficient in number and qualification
  • At least 51% of all onshore personnel must be community citizens
  • At least 2/3 of total tonnage under management must be managed within the community (any excess of 1/3 taxed under corporation tax). The application of the tonnage tax system is compulsory for owners of Cyprus flag ships and optional for owners of non-Cyprus flag ships, charterers and ship-managers. Those who choose to enter the Tonnage Tax regime must remain in the system for at least 10 years unless they had a valid reason to exit such as disposal of their vessels and cessation their of activities.

Non-Domiciled Tax Status

Foreigners who decide to move their personal tax residency in Cyprus, will automatically be considered as non-domiciled in Cyprus for a maximum of 17 years. For tax purposes, non-domicile persons who become Cyprus tax residents will now be completely exempt from Special Defence Contribution tax (“SDC”).

Income Tax Incentives to New Cyprus Tax Residents

Remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment, exemption applies to 50% of the remuneration for a period of 10 years for employments commencing as from 1 January 2012 provided that the annual remuneration exceeds €100.000.

For employments commencing as from 1 January 2015 the exemption does not apply in case the said individual was a Cyprus tax resident for 3 (or more) tax years out of the 5 tax years immediately prior to the tax year of commencement of the employment nor in the preceding tax year. In certain cases, it is possible to claim the exemption where income falls below €100.000 per annum.

Remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment. The exemption is available for a period of 5 years for employments commencing during or after 2012 and it applies from the tax year following the year of commencement of the employment, with the last eligible tax year being 2030. This exemption may not be claimed in addition to the immediately above mentioned 50% exemption for employment income. Exemption is granted on 20% of the remuneration with a maximum amount of €8.550 annually.

Notional Interest Deduction

Equity introduced to a company as from 1 January 2015 (new equity) in the form of paid-up share capital or share premium may be eligible for an annual notional interest deduction (NID). The annual NID deduction is calculated as the new equity multiplied by the NID interest rate. The relevant interest rate is the yield on 10 year government bonds (as at December 31 of the prior tax year) of the country where the funds are employed in the business of the company plus a 5% premium. A taxpayer may elect not to claim all or part of the available NID for a particular tax year. Certain anti-avoidance provisions apply.

Other exemptions

Type of income Exemption limit:

  • Profit from the sale of securities, the whole amount
  • Dividends (excluding, as from 1 January 2016, dividends which are tax deductible for the paying company), the whole amount.
  • Interest not arising from the ordinary activities or closely related to the ordinary activities of the company, the whole amount.
  • Gains relating to foreign exchange differences (forex) with the exception of forex arising from trading in foreign currencies and related derivatives, the whole amount.
  • Profits from the production of films, series and other related audio-visual programs. The lower of 35% of the eligible expenditure and 50% of the taxable income. Any restriction may be carried forward for 5 years.

Valuable Facts You Need To Know Before You Start Investing

For many, many years people have been investing in numerous things. Some of them were more or less successful. As a newbie, this whole process may appear to be a bit intimidating at first.

And that’s completely understandable, however, if you get your facts straight and get yourself familiar with some things, you can definitely succeed. Just bear in mind that you’re not the only one who is doing it.

A lot of people have done the same and have managed to turn their life around. With a little bit of patience, effort, and discipline, anything can be done. To help you out, we’ve put together some extremely useful tips. Let’s check them out together!

Important Things Every Investor Should Know

Your Net Worth Must Be The Primary Personal Finance Number You Care About

So what does the term net worth even mean? What does it represent? It is actually the total value of all the things you own, such as your vehicle, house, and stuff that can quickly be resold, along with the balances of your savings accounts, checking account, or any type of investment that you have.

Of course, you also have to take into account the things that you’re forced to spend your money on, such as student loans, credit cards, mortgages, and many others. The whole point is to focus on the money that you already have and how you can increase that amount.

There are so many different ways you can do it. For instance, you can start by paying off all your debts, stop wasting money on things you do not necessarily need, and find a way to enhance your income.

One of the best ways to do it is to invest. Now, if you do not have a long-term perspective about certain things, then maybe investing is not the best option for you for the time being, or if you think that your current checking account balance is more crucial than your net worth.

Understand The Stock Market

There are some terms that you need to comprehend before you even begin. For example, when people say that the stock market is being down or up, they generally think of the biggest market indexes.

Namely, this index monitors the performance of various stocks which either represent a specific area of the market or the market as a whole. For instance, if you’re interested in the South African stock market, you can check out JSE Top 40 index to see what’s currently going on. Generally speaking, investors utilise indexes to assess the performance of their portfolios and sometimes, to state their stock trading decisions.

Furthermore, if you want to, you can always invest in a whole index by using exchange-traded funds and index fund, or even ETFs which supervise a particular index or one sector of the market.

Providing New Investors With More Useful Tips

You Must Pay Off All Your Credit Cards As Well As Other High-Interest Debts

If by any chance you have high-interest debts, anything that’s over eight percent interest rate, then one of the best things you can do for yourself is to work on paying down that debt. Namely, you are going to save so much money just by paying off the debt from your credit cards.

As previously mentioned, paying off any of your debt is going to have a huge, positive impact on your overall net worth which will lead to its slow increment because nothing will hold it back. More importantly, all of this will lead to fewer monthly costs, which means that you will have much more cash to invest than you did before.

All in all, if you have these high-interest debts, you should prioritise them and pay them off as soon as possible before you proceed with investing. Not only will they provide you with a better return, but you will drastically enhance your monthly cash flow and enhance net worth.

Assess Your Comfort Zone In Taking On Risk

The ugly truth is that every investment comes with certain risks and that’s something nobody can deny. If you want to acquire securities, like stocks, mutual funds, or bonds, then it’s of huge importance to comprehend everything before you proceed.

Otherwise, you are going to lose a bunch of money. Generally speaking, the cash you spend on securities normally isn’t federally insured. What does it mean? It means that you could potentially lose the amount of cash you’ve invested.

This can happen even if you acquire your investments via a bank. Does it mean that you shouldn’t risk at all? Definitely not! Who knows, maybe if you invest some money, you receive an amazing investment in return.

Furthermore, if you have a long-term financial goal, it is highly likely you’ll earn more money if you smartly invest asset categories with bigger risks, such as bonds or stocks, rather than focusing on assets with less risk.

On the other hand, if you have a short-term financial goal, then you can freely invest your money only in cash investment. The biggest problem when it comes to investing in cash equivalents is definitely inflation risk.

Your Spouse Must Agree With Your Plans

Of course, this segment refers to those who are married. Now, if that’s the case with you, then it would be recommendable to talk to your spouse about your financial plans and see what he or she thinks about it.

Moreover, this conversation should cover three major points. The first one explains your goals. Why are you focusing on a particular investment? What do you want to accomplish with it? The second one should refer to the plan.

Did you create any plan that is going to help you achieve this goal? Do you think that what you’re doing makes sense at all and where are the accounts and whose name did you put on them?

If you do not have this type of conversation with your partner, then you will potentially cause a huge problem? How come, you probably wonder? Well, that’s because if your spouse notices that the money is slowly vanishing he/she will want to know what is going on.

Nobody can ever tell you what you can and cannot do with your money, however, it doesn’t mean that you shouldn’t be smart about it. That’s precisely why we’ve created these guidelines, to help you be and stay successful on this journey.