Even if you invest your money it still won’t help you. Investing your money is not enough because you need to understand one more idea: diversification. (Money experts that charge you $1000 an hour for their time call it asset allocation but we’re not fancy and just want to get to the point.)
The hardest part to understand is how much money to place into each asset class. Hedge funds that invest billions of dollars spend decades mastering this one skill and it’s their secret sauce.
The solution to this problem is different for everybody. How much money you invest in each asset class depends on your financial situation and your age.
If you’re broke or have lots of credit card debt then you’re normally going to focus on wiping that out first before worrying about investing. If you have no debt but only have less than $10,000 then you’re probably going to want to be more cautious in case you need access to that money. If you have $100K or more to invest then you might want to be a little more aggressive.
If you’re a millennial like me then you may want to go a little more aggressive into stocks because you’ll have time to ride out any recessions.
The way to save yourself financially is to learn about where you should invest your money and how much cash to allocate to each asset class.
In really simple terms, you want to learn enough about money that you can successfully put a percentage value next to each asset class. Here is a mock example:
Gold: 5%
Real Estate: 30%
Digital Currency: 5%
Bonds: 20%
Stocks: 40%
Learn about each of these asset classes and then allocate your money accordingly.
It is true. This topic speaks correctly.