All investments are based on one single
assumption, i.e. you have extra cash to invest. Yet so many people out there
are facing difficulties saving sufficient money for investment. How exactly to
save money for investment?
1.
Classify your monthly income
Dedicate a set proportion of your monthly
income into LIS categories, namely Living, Investment, Saving. An example of an
LIS proportion is 80% - 10% -10%. This means you would live with 80% of your
income every month (for meals, utilities, loans, etc) and save the other 20%,
10% in Investment (strictly for investment only) and 10% in your savings
(normal savings, you can also use it for weekend getaways, holiday trips, buy a
new TV set, etc).
2.
Spend only the necessary
Set up budget how to spend your 80%. Find
out areas of expenditure you can be thrifty on, which are usually going out,
food and other non-essentials though ‘fun’ things. If you have any leftover
money from your L category you can always channel more funds into your I and S.
Never live beyond your means.
3.
Save in bank accounts
Save your 20% plus whatever leftover from L
in bank. Explore different types of saving accounts and pick one which offers
higher interest rate. This not only secures your fund, it also prevents you
from accessing your funds readily.
4.
Make it less accessible
An additional step to secure your
Investment fund is by making it less accessible, e.g. without using an ATM
card. You should never touch your I fund, never ever, unless when you are using
it for investments (e.g. stocks, house, etc).
5.
Get started now!
Regardless of how much is your monthly
income and how much you have in your savings currently, start saving now! You
can begin with 1 dollar in your account. As long as you keep doing it, you will
soon have sufficient money for investment, as well as some savings for other
purposes.
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