The Power Of 'Will Invest': How Committing To Investment Can Change Your Future

Will invest could refer to a number of companies, including Willinvest AG, a Swiss company based in Luzern that deals with the acquisition and sale of intellectual property rights and real estate, and Will Invest Limited, a private limited company that deals with the buying and selling of real estate. When it comes to investing, it is important to plan, research, and diversify. It is crucial to understand the risks and returns of different investments and to make sure they align with your financial goals and risk tolerance.

Plan, research, diversify

Planning, researching, and diversifying are the keys to successful investing. Here are some steps to help you get started:

Plan

Before investing, it is important to first pay off any existing debts, such as credit card or personal loan debts. It is also crucial to have emergency savings set aside, ideally enough to cover at least three months' worth of expenses. This will ensure that you don't have to sell your investments in case you need cash quickly.

Next, develop an investment plan by defining your financial goals, risk tolerance, and investment time frame. Be realistic and ensure that you are comfortable with the level of risk you are taking.

Research

Take the time to understand different asset classes, including the associated risks and returns. Higher returns typically come with higher risks, and it is important to be aware of potential scams. Understand the pros and cons of each investment option, and ensure that you can explain how it works to someone else. Consider factors such as fees, charges, and legal and tax implications. Decide whether you want to invest directly or through a broker or fund manager.

Diversify

To lower the risk of your portfolio, diversify your investments across and within asset classes. This will help ensure that your investments are not all impacted by the same market forces.

By following these steps, you can make more informed investment decisions that align with your financial goals and risk tolerance.

Pay off debts

Paying off debts can be a challenging but rewarding endeavour. Here are some detailed instructions to help you achieve financial freedom:

Assess Your Debt:

Start by listing all your debts, including credit card balances, student loans, mortgages, or any other liabilities. Identify the type, remaining balance, and interest rate for each debt. This step will help you understand the extent of your debt and make informed decisions about repayment strategies.

Create a Budget:

Making a budget is crucial to gaining control over your finances. Track your income and expenses by creating a monthly budget. You can use a simple spreadsheet or utilise budgeting apps like Mint to closely monitor your spending and debt payments. A budget will help you identify areas where you can cut back and free up more money to put towards debt repayment.

Choose a Repayment Strategy:

There are several debt repayment strategies you can consider:

• Debt Avalanche Method: Focus on repaying debts with the highest interest rates first while continuing to pay the minimum on other debts. This strategy can save you money in the long run by eliminating high-interest debt faster.
• Debt Snowball Method: This approach involves tackling the smallest debts first. By repaying smaller debts in full, you gain a sense of accomplishment and motivation to continue your repayment journey. Once the smallest debt is cleared, move on to the next smallest debt, and so on.
• Balance Transfers: Consider transferring your debt to a new account with a lower interest rate, either as a permanent feature or an introductory offer. However, you will need to apply and get approved for a balance transfer card, typically requiring good credit.

Increase Your Income:

If possible, consider taking on a side hustle or freelance work to boost your income. This could be pet-sitting, tutoring, virtual assistance, or driving for ride-sharing services like Uber or Lyft. Increasing your income stream will provide extra funds to accelerate your debt repayment.

Sell Unwanted Items:

Go through your belongings and identify items you no longer need or use. You can sell these items online, at consignment shops, or through platforms like Poshmark, Facebook Marketplace, or Craigslist. Use the extra cash generated from these sales to pay down your debts.

Consider Debt Consolidation:

Debt consolidation allows you to combine multiple debts into a single loan with one monthly payment, often at a lower interest rate. This can simplify your repayment process and make it more manageable. However, be cautious and ensure that the new loan has favourable terms and won't end up costing you more in the long run.

Seek Professional Help:

If you feel overwhelmed or unsure about your debt repayment options, don't hesitate to seek help from a credit counselling agency or a financial planner. They can provide guidance, support, and personalised strategies to help you manage and repay your debts effectively.

Emergency savings

Accessibility and Liquidity

Emergency funds should be easily accessible and liquid so that you can quickly pay for unexpected expenses. Investing in volatile assets like stocks or real estate may provide higher returns, but they can also tie up your money, making it difficult to access when you need it. Additionally, selling these assets quickly may result in incurring penalties or selling at a loss.

Risk of Loss

Putting your emergency fund in the stock market or other high-risk investments exposes you to potential losses. If the value of your investments decreases, you could lose a significant portion of your emergency savings. In contrast, keeping your funds in a savings account preserves your initial deposit, ensuring you have the money when you need it.

Tax Consequences

Investing in a taxable brokerage account will result in tax consequences when you sell assets and make a withdrawal. Short-term capital gains tax, which is usually the same as your regular income tax rate, applies to profits from selling assets held for one year or less. Therefore, if you need to withdraw from your emergency fund within a year, you will likely owe more in taxes.

Alternative Options

Instead of investing your emergency fund, consider placing it in a high-yield savings account. These accounts offer competitive interest rates, allowing your money to grow while remaining easily accessible. Money market accounts are another option, as they provide higher-than-average annual percentage yields (APYs) and often come with a debit card or checkbook for easy access.

In conclusion, while investing your emergency fund may seem appealing, it is generally not advisable due to the risks involved. By keeping your emergency savings in accessible and relatively stable accounts, you can ensure you have the funds you need when unexpected expenses arise.

Investing plan

Step 1: Plan

Before investing, it is important to first pay off any existing debts, such as credit card or personal loan debts. It is also important to have emergency savings set aside, typically enough to cover three months' worth of expenses. This will ensure that you do not have to sell your investments in case you need cash quickly.

Step 2: Research

Once you have planned, it is important to research different asset classes and understand the associated risks and returns. Higher returns typically mean higher risks, and it is important to be cautious of scams. Understand the pros and cons of each investment option, and ensure that you can explain how it works to someone else. Consider factors such as fees, charges, and legal and tax implications.

Step 3: Define Goals

Develop an investment plan by defining your financial goals, risk tolerance, and investment time frame. Be realistic and ensure that you are comfortable with your choices. Consider seeking financial advice from a professional adviser or discussing your plans with a trusted friend or family member.

Step 4: Diversify

Diversifying your investments is crucial to lowering the risk of your portfolio. Spread your money across and within asset classes to minimize risk.

Step 5: Monitor

Keep track of your investments by regularly reviewing your paperwork and performance.

Step 6: Exit Strategy

Finally, understand how you can get your money back if needed. Check for any fees associated with early withdrawal, and consider the liquidity of your investments.

Research asset classes

When researching asset classes, it's important to understand that an asset class is a group of financial assets that share similar qualities. The main asset classes are equities, fixed income, cash or marketable securities, and commodities.

Equities

Also known as stocks, these are cash flow-producing entities or businesses that generate value over time and are listed on a public stock exchange. Equities are high-risk investments but they also tend to offer the best long-term returns. Their performance is influenced by the financial health of the company and the overall economic climate.

Fixed Income

Fixed-income assets provide recurring income over fixed periods of time. They are lower-risk than equities and offer fixed returns, making them suitable for conservative investors. Examples include bonds, federal agency notes, and treasury bills.

Cash and Cash Equivalents

This asset class includes actual cash on hand and highly liquid securities that are similar to cash, such as savings accounts and money market funds. This type of investment is considered very low risk since there is little chance of losing money, but the returns are also lower.

Commodities

Commodities are basic goods such as metals, energy resources, and agricultural goods. They are crucial to the economy and can be viewed as a hedge against inflation. They are more stable with respect to market volatility but tend to generate lower returns.

Other Asset Classes

In addition to the main asset classes, there are alternative asset classes such as real estate, valuable inventory (e.g. artwork, stamps), and investments in hedge funds, venture capital, or cryptocurrencies. These alternative investments may offer higher returns but also carry their own unique risks.

Factors to Consider

When researching asset classes, it's important to understand the risk and return characteristics of each class, as well as their liquidity. Additionally, economic factors such as interest rates, inflation, economic growth, and political stability can significantly impact the performance of various asset classes. Diversification across multiple asset classes is often recommended to reduce risk and maximise returns.

Frequently asked questions