If you’re looking towards making a short-term or long-term investment, there are options that present a higher return potential and more significant risks while others present fewer risks and lower returns. Freelancers who are looking for investment platforms also have similar choices and must always try to strike a balance between these options.
Here are some vital tips to ensure you’re investing and saving wisely and will have sufficient money after you attain your preferred retirement age.
- Emergency Funds Are a Priority
Due to the unpredictable nature of their income, freelancers must always plan for the periods when their monthly income won’t meet their expenses. If you can avoid an emergency fund for about six months, then it implies that your saving and investment objectives should not be halted when you have low income.
This is where self-discipline should come in. When you have some income boosts, make a point of replacing what you had used from the emergency kitty.
- Be Careful With Short Term Investments
Many financial planners will advise that more risky investments are a better option when you’re still young or have cash that you won’t miss if lost. TO some extent, this is some good advice.
If a risky investment turns sour in the early days of life, you will have enough time to recover your losses. If the money invested wasn’t part of your expenses or investment endgame, you will not feel too much damage. There are numerous options for ventures which possess great risks but also the potential to reap big.
Tech startups are now big more than ever, and investors have witnessed great gains. Most of them reach out to the smaller investors via peer-to-peer lending, crowdfunding, and even smaller investment rounds. Researching such potentials could be interesting.
ICOs and cryptocurrencies are another “hot” investment platform. While most of them do not generate the funding required to catapult, few of them make it. Crypto-investments need great research in order to discover the cryptos with great potential and which are trustworthy to avoid being a victim of the hype.
Robo-investing products are also on the rise, offering a more straightforward and affordable alternative to having a broker’s account with your financial institution. Most of them can help you create a personalized portfolio depending on your income, although irregular, and possibly risk tolerance. Some applications usually have a learning curve and might need you to be conversant with all aspects of the stock market, while others are incredibly simple to use even for dummies.
There are also many other options for volatile and risky investments. However, perform your research and make the right decision before putting your money into any of them.
- Focus on the Long Term Secure Investments
This is where 3 year fixed rate bonds or an ISA comes in. This is the long-term savings which you won’t touch until you attain your retirement goal age.
The amount you contribute to this long-term savings plan is obviously subject to debate. There are financial planners who claim that 10% of your income must be directed towards long-term saving. Others say that you must establish the amount you want to have by the time you retire in addition to stating that freelancers should save 12 times their average yearly income.
Here is a different idea all the same. Perhaps you should project how your expenses will look like at retirement instead of only looking at the percentage of your income you should save. This could be difficult to determine considering the uncertainties of medical expenses and inflation. However, with assistance from a professional retirement advisor, you’ll at least have a rough idea of how things should work.
Freelancers are often faced with unique challenges for investment and savings, mainly as they lay out their long-term retirement needs. The key to overcoming such challenges is establishing a solid plan which includes emergency funds as well as long-term investments and some slightly risky but well-researched investing when funds are in surplus.