The best way to double your money is not to fold it and put it in your pocket. It is to invest in it.
A lot of advice abounds on what you should do to invest your money wisely. But if you understand what you should NOT do with your money, you may be safer by far! Note the following seven tips carefully:
1. Don’t Take Excessively Long-Term Loans
The interest costs of a 40-year mortgage or a seven-year car loan will far outweigh the benefits, and the asset’s value will reduce to zilch.
2. Don’t Invest in Something You Cannot Figure Out
Get an accountant to explain the fine print of the investment. If it doesn’t make sense, trust your gut instinct and stay away. Ponzi schemes, pyramid rackets, and fraudulent fund managers will plunder your savings before you can even say, Madoff!
3. Don’t Pay an Accountant More than He is Worth
Is the value of the advice proportional to his high costs? Check on his credentials before shelling out hefty fees. Can’t someone else do an equally competent job?
4. Don’t Invest All Your Money in Your Company Shares
That’s like putting your eggs in one basket. Your savings go down the drain if the market hiccups and your business fails. Keep that investment below 10 percent of your portfolio.
5. Never Apply for More than One Credit Card
The craving for impulsive buying will worsen and burn a huge hole in your finances. Ensure that you repay that one card well before the last date to avoid unnecessary fines.
6. Don’t Liquidate Your Pension Fund to Finance Your Children’s Education
They can avail of loans. You won’t be so lucky when you are past your retirement age. Keeping your 401K well-funded allows for long-term growth. That’s a thing you must be careful about.
7. Don’t Buy Into Investments That Promise The Sun
Give preference to funds that performed well last year and give reasonable returns comparable to similar packages.