Everyone has their own investment objectives and risk tolerance. Depending on that combination, you may be risk-averse, risk-seeking or somewhere in between. Regardless of where you fall on that spectrum, it’s important to put your money to work. Considering inflation and the rising cost of living, you want to make sure that you park your money somewhere it will appreciate faster than inflation.

Due to low trust in financial institutions, lack of knowledge, or need for liquidity, you may be more comfortable leaving your money in a savings account where it will earn less than 1% annually. If your need for liquidity is less and your tolerance for risk is higher, then there are other options you can explore, ranging from money market funds to opening a brokerage account to invest in the stock market. Alternative investments include real estate, start-ups and peer-to-peer lending. There is no right path. Just make sure you invest in what you know and you’re comfortable with the risks.

The earlier you start, the better. This way, you can take advantage of compounding interests — it’s the gift that keeps on giving. When it comes to investing, time is your friend. Ads for get-rich-quick schemes are red flags. As much as you love your cousin, that new business venture that promises immediate pay-off is also a red flag. Remember, building wealth takes time.

A great vehicle for building wealth is your retirement savings account, aka your 401(k) or an Individual Retirement Account (IRA). Getting in early is best, but it’s never too late. Some jobs that offer a 401(k) plan will match your contributions up to a certain amount. Speak to your HR department to confirm eligible contributions. That’s free money. If that commitment isn’t feasible right now due to other constraints, you can also allocate a percentage of your bonus or tax return money towards retirement.

Smith Saintil

Writing since December 2021 · 1 story contributed