How to find the top REITs
In today’s article, we are going to talk about the best way to invest your money.
I’m not going to bore you with tons of facts, figures and examples. But rather, give you a fast and quick method on how to invest your money right, the fast way the right way.
Also read:
- Warren Buffett And The Curious Case Of Tesco Shares
- Bill Nygren – How To Apply A Private-Equity Approach To Public-Equity Investing
- Blackstone To Buy Stake In Controversial Oil Pipeline For $1.6 Billion
STEP 1
Now let’s get one thing straight, if you are in debts; that is, if you still owe money to a bank, to a person, to whatever entity, you got to pay it down first. Especially debts with high interest rates. Pay them off as soon as you can!
Once you are ‘relatively’ debt free (I highlight the word relative because I leverage on low interest debt to invest-more details on this later) you will need to
STEP 2
Automate your savings account. Why? Well because it is the best way to help you financially deal with the uncertainties of life (such as job loss or medical expenses) and give you ammunition to achieve your financial dreams (pay for college, purchase a car, travel, or save for retirement).
Remember to pay yourself first! Depositing money into a savings account should take priority over any additional spending.
Here are some ideas to help:
- As you pay your monthly bills, set money aside to deposit into your savings.
- Ask your bank to automatically transfer money from your checking to your savings once or twice a month.
- Request a direct deposit from your employer for a portion of your paycheck to be deposited into your savings account. Make sure you are not spending more than you earn and that you are able to save money every month.
Ultimately, you should maintain a balance that would at least cover six to 12 months of your expenses. Small amounts add up and make a difference over time.
STEP 3
Start to ride on the power of compounding. I am talking about real investing. Not trading, not finding the next best stock or company that promises to give you huge returns and if it doesn’t you dumb it away…no.
Too many investors have spent too much time trading and trading (in my opinion) usually lose out in the long run.
So what is ‘riding on the power of compounding actually mean? Allow me to give you an example
If you have bought Vanguard 500 Index fund (VFINX) and held this etf for the 20 years ending March 15, 2017.
A $10,000 investment capital outlay in March 15, 1997 would have grown to a value of $42,700 at the end of the 20-year period. This assumes the reinvestment of all fund distributions for dividends, interest or capital gains back into the fund.
Without reinvesting the distributions, the value of the initial $10,000 investment would have grown to $29,040 of the amount with reinvestment.
Let’s look at more examples,
A 25-year-old who wishes to accumulate $1 million before age 53 would need to invest $1000 each month assuming a constant return of 7%.
A 35-year-old wishing to accumulate $1 million by before age 60 would need to invest $1,500 each month using the same assumptions.
A 45-year-old would need to invest more per month in order to hit $1million before 60 and so forth.
Having seen all these examples, what does it mean to be actually riding ‘on the power of compounding interest’?
It implies the following [very important part]
You need to find an investment that is
- Easy to understand
- Easy for you to manage its risks
- Able to give back to you consistently
And you need to
- Be disciplined enough to reinvest the returns
- Start as soon as you can (more time for your investments to grow and weather the ups and downs of the stock market and economy)
STEP 4
The next question you should be asking is, what investment opportunities are out there that is easy to understand, easy to manage and able to give back to you consistently?
They are
- Index ETFs
- Top REITs
Look no further then these two investment opportunities. Why? Well because these investment give decently high CONSISTENT returns and their risks are easily managed.
Different investment options offer different rates of return. Generally, the higher rate of return has higher the chance of losing your investment (the lower the rate of return, the lower the chance of losing your investment dollars) but with rop REITs and Index ETFs, this equivalent exchange of high return high risk can be adjusted to your favour, if you put in the find exceptional Index ETFs and top REITs to put into your portfolio.
How to find exceptional ETFs (click here)
How to find exceptional Top REITs (click here)
And that’s all. Follow these 4 steps on you’re well on your way to financial freedom.
Article by Rex Ho
