It’s decision time. It’s time to get off the sidelines and jump into the world of investing. Luckily, there has never been a better time to wade in the water.
Why is investing so vital to your financial lifestyle? The average person cannot outpace inflation unless they invest their money.
Therefore, becoming an investor must be your top priority with each passing paycheck. With the introduction of artificial intelligence, you may not be receiving a paycheck much longer.
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But, which investments are best for your lifestyle, temperament, and pocketbook? Today, I will explain some asset classes that could be part of your future. Let’s begin.
The stock market. The easiest place to start your investment career is in the stock market. There are lots of ways to invest in the stock market, so you can find what suits you.
Some people consider the stock market the greatest wealth generator of all time. I, however, don’t believe this theory.
The stock market takes a lot of money—to make a lot of money. Therefore, you must make your money elsewhere and then insert it in stocks.
Therefore, the stock market is the place to put your money once you earn it. If you can follow this logic, it’ll help you make sound investment decisions in other asset classes.
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Now, let’s review the different options available to you in the stock market. You can go as deep or shallow as you want, while remaining comfortable with your choices.
Index fund investing involves purchasing a broad market index. Some of these include the Dow Jones Industrial Average (DIA), the Nasdaq 100 (QQQ), and the S&P 500 (SPY).
The goal of index fund investing is to capture the average return of the stock market. For the most part, this investment style will help your portfolio outpace inflation.
Dividend growth investing involves purchasing blue-chip companies with a long history of paying dividends. The goal of DGI is to retire on the dividends after years of compounding interest.
Income investing is my favorite type of stock market investing. It consists of purchasing stocks and funds that pay high yields. This is a high-risk, high-reward investment style.
I love income investing because you know exactly what you are getting when you make a purchase. You’re exchanging your money for a certain yield. To me, it just makes sense. I look for annual yields of 9% or higher.
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Options trading consists of buying and selling calls and puts to make a profit on market volatility. Trading options isn’t for the faint of heart; however, it can be lucrative to those who are patient.
As you can see, there are lots of ways to earn a great return from the stock market. However, you must read and become familiar with the terms and conditions of each method to achieve long-term success.
Real Estate Investing. Real estate investing seems daunting from the outside. It seems like a high-risk gamble to purchase a $500,000 rental property.
To some extent, real estate investing can be risky. However, you can mitigate most of that risk with knowledge and an emergency fund.
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The best way to start investing in real estate is to lower your housing costs. That’s right; you don’t need to purchase a home to become an investor.
Investors look for a return on their investment. Let’s explore some simple ways to start real estate investing. I wrote about this in the “Real Estate is a Mindset” series about four years ago.
Let’s say you rent an apartment for $1,500/month. Your parents offer to let you move back home, and you can pay them $500/month. You now have $1,000/month to invest in stocks or save for a home down payment.
Yes, it’s that simple. Real estate investing is just a state of mind. The goal is never to have to pay rent or a mortgage out of your own pocket.
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By offering other people clean housing, you are adding value to the world. Let’s look at some other ways to make money in real estate.
Let’s say you own a two-bedroom condo with a mortgage of $1,500. You decide to get a roommate who pays you $750/month. You now have $750 that you can invest in different asset classes.
Moving up the line, let’s say you purchase a triplex (one house with three units) with a mortgage of $2,000/month. You live in one unit and charge $1,000 per month for the other units. You live for free.
Eventually, you save enough to purchase another home while keeping the triplex. You can now charge $1,200 per unit, for a total of $3,600/month in rental income against a $2,000 mortgage.
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I may make it sound simple, but this is truly how it works. The primary requirement for real estate investing is time. The only way to circumvent time is through leverage (or risk).
Don’t overthink real estate investing. Your goal is to provide safe, clean housing to others at a profit. If you can do that, you’ll always have a source of passive income.
Business. Starting a business can be a cutthroat and challenging endeavor. However, it can also be low-risk, high-reward if you know what you are doing.
Many entrepreneurs and business owners start their businesses with high overhead and expenses. This is a recipe for disaster. Let’s start things much slower and with less risk.
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There are many ways to start a business, such as using Airbnb to offer a room, using Turo to provide a car, and installing an ATM.
The key to starting a low-risk business is to focus on passive income. Yes, you will need to exchange some time for money (like clearing your ATM); however, you don’t need to start a full-time job.
Many people start a business to become rich; however, I want to diversify my passive income portfolio. I write because it’s challenging and pays me a little cash.
Look at your overall investment portfolio: stocks, bonds, real estate, and cryptocurrency, and see how much time you want to spend on a business.
My wife took our dog to get groomed yesterday. She arrived at someone’s personal residence and dropped off our dog. Then my wife returned three hours later to retrieve the dog.
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The pet groomer works from home, on her terms, with a cash-only business. She is conducting business around her lifestyle, not the other way around.
Start a business that considers your time, your family, and your commitments. You can create something great in the white space of your life.
Conclusion. It’s best to diversify your asset classes. You may have to work a job until you get enough passive income to retire.
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Robert Kiyosaki said that he retired once he reached $10,000/month as passive income. Then he could focus on becoming rich. I love this statement.
I retired from the Marine Corps with $8,500/month in passive income. Now I can focus on real estate, business, and stock market investing.
Look at each asset class as a piece of a larger pie. You want lots of passive income from lots of sources; that’s how you get rich and stay rich. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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