Tips & Factors for Investing Money

ExpertVillage Leaf Group December 21, 2020 2:12 Acting

General investing basics, which matter more than usual when your income arrives in unpredictable lumps.

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6 Things Actors Should Know About Investing an Irregular Income

Drawn from what is actually said on camera, so you can decide whether to spend the 2:12 watching it.

Time horizon sets how aggressive you can be

Someone with decades ahead of them can absorb volatility that someone needing the money soon cannot. It is the first question any adviser asks, and it is the one most people skip past on the way to picking investments.

Know your own tolerance for the market moving

How comfortable you actually are watching a balance fall is a real input, not a character flaw. A plan you abandon in a bad month is worse than a cautious plan you keep.

Pay off the high-interest debt first

The clearest point here. Carrying a card at twenty percent while chasing a ten percent return is a guaranteed loss. Clearing expensive debt is the highest certain return available to you and it comes before any investing.

Start small and automate it

Both banks and investment firms will move a set amount out of your account monthly into a fund of your choosing. Automation is what makes it survive the months when you would rather not.

Dollar cost averaging smooths the timing problem

Investing the same amount every month buys at the highs and the lows and lands you at an average price. That removes the need to guess when to buy, which is the part nobody can do reliably anyway.

Pick a number you can sustain without strain

Consistency matters more than size, and ten percent of earnings is offered as a reference point rather than a rule. On an income that arrives in lumps, an amount you can hold through a quiet quarter beats an ambitious one you cannot.

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Full transcript (350 words)

so how should you invest your money well there's a number of different factors that we need to consider first of all we need to know how old you are because someone who has a longer time frame of investing is going to be more aggressively invested than someone who has a shorter time frame also how comfortable you are you with fluctuations in the market that's another big determination what are your goals and how aggressive are those and are they realistic and what are your opportunity costs meaning if you have a 20 credit card balance it doesn't make sense to invest money and possibly only earn 10 percent so i would suggest before you even start to invest to make sure all of your high interest credit cards are paid down now once you have a good handle on your debt i would start out small there are many easy ways through your bank and through an investment firm to invest money every month that just leaves your account and invests in a mutual fund so for example if we take 12 months and every month you invest so for example if we take 10 months or so for example if we take 12 months every month you invest a hundred dollars and that hundred dollars automatically goes in to an investment mix of your choice you'll be able to capture the highs and lows and invest in an average rate and at the end of the year you should have more than twelve hundred dollars if the markets are going up this is called dollar cost averaging and it's a good way to minimize your risk when you're investing now once we determine how much you can invest each month make it a consistent plan make it something that's achievable that you're able to do without worrying about being over extended a good reference point in savings is 10 of your earnings if you can do this this is a good start now in terms of where to invest your money stay tuned for the next segment where we can discuss that