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    • Month: November 2022

    Saving vs Investing; What should I prioritize and how can I juggle between them.

    It’s a common question with a not so common answer. “Should I be saving or investing my money?”. The answer to this question is unique to each individual person and depends on your specific financial situation. There are many factors to consider when trying to decide whether you should save or invest your money. In this blog post, we will explore some of these factors and offer guidance on how you can make the best decision for your personal finances.

     

    What is saving?

     

    Saving money is important for everyone, but it’s especially important for those who are trying to become financially independent.

     

    Saving money gives you a cushion to fall back on in case of an emergency, and it can also help you reach your financial goals quicker.

     

    There are many different ways to save money, including setting up a budget, Automating your finances, and looking for discounts.

     

    Investing is also important, but it’s not as urgent as saving. You can start investing when you have extra money left over after you’ve saved up an emergency fund.

     

    Investing can help you grow your money faster than saving alone, but it also comes with more risk.

     

    You don’t have to choose between saving and investing – you can do both at the same time! Just be sure to prioritize saving over investing if you’re trying to become financially independent.

     

    What is investing?

     

    When it comes to financial planning, the terms “saving” and “investing” are often used interchangeably. They are both important aspects of building long-term wealth, but they serve different purposes.

     

    Saving is putting money aside for a rainy day – it’s your safety net for unexpected expenses or a drop in income. Investing is using your money to grow your wealth over time.

     

    The key difference between saving and investing is that savings are meant to be accessed in the short-term, while investments are meant to be held for the long-term. This doesn’t mean that you can never access your investment account – you can, but there may be penalties for doing so.

     

    So, which should you prioritize? The answer depends on your goals and timeline. If you need access to your money in the next few years, saving is the way to go. But if you have a longer time horizon, investing has the potential to grow your wealth more than saving alone.

     

    Of course, you don’t have to choose one or the other – you can do both at the same time! The key is to create a plan that sets aside money for both short-term and long-term goals.

     

    The difference between saving and investing

     

    The act of saving money is simply setting aside cash to be used in the future, while investing involves putting money into assets with the goal of earning a return. When it comes to deciding whether to save or invest, there is no one-size-fits-all answer – it depends on your individual circumstances.

     

    Here are some things to consider when making the decision:

     

    Your time horizon: If you have a longer time horizon until you need the money, you may be able to afford more risk and therefore may want to consider investing. On the other hand, if you have a shorter time horizon, you may want to focus on saving so you don’t need to worry about market fluctuations.

     

    Your goals: What are you hoping to achieve by saving or investing? If your goal is simply to grow your wealth over time, investing may be the better option. If your goal is to have cash available for a specific purpose in the near future (e.g. buying a house), then saving may be better suited.

     

    Your risk tolerance: This refers to how comfortable you are with seeing the value of your investment fluctuate. If you are okay with volatility, then investing may make sense for you. However, if you prefer stability and predictability, saving might be more up your alley.

     

    Ultimately, there is no right or wrong answer when it comes to deciding whether to save or invest – it all depends on what works best for you given your

     

    Should you save or invest?

     

    When it comes to saving versus investing, there is no easy answer. It depends on many factors, including your goals, your age, your risk tolerance, and your current financial situation.

     

    Here are a few things to consider when making the decision of whether to save or invest:

     

    1. What are your goals?

     

    Are you trying to save for a specific goal, such as a down payment on a house or retirement? Or are you simply trying to grow your wealth over time? Your goals will help guide your decision of whether to save or invest.

     

    1. What is your age?

     

    Your age can play a role in how much risk you are willing to take with your money. If you are younger, you may be able to afford more risk and thus may want to invest more of your money. However, if you are closer to retirement age, you may want to focus more on saving and preserving your capital.

     

    1. What is your risk tolerance?

     

    Investing involves some degree of risk, and not everyone is comfortable with that. If you have a low risk tolerance, you may prefer to save more of your money instead of investing it. On the other hand, if you are willing to take on more risk, investing may be the better option for you.

     

    1. What is your current financial situation?

     

    How to save and invest

     

    There are a lot of ways to save and invest your money, but it can be difficult to decide what to prioritize. Here are a few tips to help you juggle between saving and investing:

     

    – Figure out your financial goals. What do you want to achieve with your money? Do you want to retire early? Do you want to buy a house? Once you know your goals, you can start to figure out how much you need to save and invest.

     

    – Make a budget. Tracking your spending will help you see where your money is going and where you can cut back in order to save more.

     

    – Automate your savings. Set up automatic transfers into your savings account so that you’re less likely to spend the money.

     

    – Invest in yourself. One of the best investments you can make is in yourself – through education, networking, and other professional development opportunities.

     

    Conclusion

     

    There is no easy answer when it comes to saving vs investing. Both have their own merits and it really depends on your individual financial situation as to which one you should prioritize. However, if you are able to juggle both saving and investing, you will be in a much better position to achieve your financial goals.

    What is a managed account? Should you use it?

    What is a managed account? Should you use it?

    There are many ways to invest in the financial markets; one is by using a managed account.

    Think of it as a broker giving you financial freedom if you don’t have time or experience in trading.

    Do you know managed accounts started in the 1970s?

    This guide will discuss managed accounts and how you can sign up for a managed account.

    What is a managed account?

    A managed account is a brokerage account in which a group of assets is selected for an individual and a professional asset manager manages them.

    Don’t get me wrong; the individual investor owns the account, but an asset manager manages it.

    With a managed broker account, you agree to let the brokerage firm decide how to invest your money. The asset manager will trade on your behalf to grow your account.

    It means you don’t have to do research and market analysis. The asset manager will do all the work.

    Types of managed accounts

    Now let’s go through the multiple types of managed accounts.

    Individually managed account

    It’s a separate account where your money manager trades on your behalf and follows all of your instructions, as the name suggests.

    The manager’s trading decisions are influenced by your risk tolerance and the strategies you devise for them.

    Most individual-managed accounts come with a minimum deposit of $10,000.

    Pooled managed account

    Pooled-managed accounts work in the same manner as mutual funds. The funds of several individual investors are pooled together into the same managed account.

    Each investor in the pool may have a different portfolio, trading strategy, and comfort level with risk.

    To decide which pool to join, you should look at how different funds have performed over the last several years.

    The minimum deposit for pooled, managed accounts is around $2000. However, it depends on the broker.

    PAMM managed account

    It is a pool account involving money management by percentage allocation.

    Here, the asset manager can look at the trading activities of several investors at the same time. PAMM accounts allocate the manager’s positions and profit/loss across several portfolios they manage.

    It is called the “percent allocation money management module.” The risk is divided across the portfolios of all traders participating in the module.

    LAMM managed account

    LAMM accounts are the predecessors of PAMM accounts. They both work the same way, but there is one big difference: you choose the trade quantity based on the volume.

    For example, if the asset manager buys one standard lot for any forex pair, each investor’s account will fall or rise by one standard lot.

    Another way to look at LAMM is as a copy trading system. The trader who manages the LAMM account charges a fee to the investors.

    The asset manager opens positions in the parent account, which are also in your sub-account.

    MAM managed account

    A MAM account, aka multi-account management, oversees multiple accounts. Here, you can tell the account manager he or she can increase each trade’s risk level and volume.

    MAM accounts have some handy features. Positions are instantly opened on all sub-accounts. Investors can get full information on conducted trades and a comprehensive trade history.

    They may also track commissions and the manager’s performance in real-time.

    What to look for in a managed account?

    Now that you know the different types of managed accounts, let’s move on to what to look for in a managed account.

    There are a few things you need to consider:

    Find a suitable broker

    It is the most important aspect of a managed account. Recently, many shady brokers have popped up offering managed accounts. As a beginner, it’s important to find a reliable, regulated brokerage firm with good investing conditions.

    Look for a good fund manager

    You need to find an asset manager to start using a managed account. Choosing an asset manager should not be taken lightly.

    You need to look at their overall profitability, years of experience, and how they perform trades.

    Costs and fees

    One of the most important things to consider is how much a managed account from a brokerage firm costs.

    Most brokers charge a fee based on the amount of money you have invested. For example, if you have $10,000 invested in a managed account that costs 1% annually, you will pay $120 every year.

    Peace of mind

    Finally, the entire point of paying for account management is to get the peace of mind you need. If your broker is hesitant or the fund manager is not following your financial goals, it’s time to switch to another broker.

    Pros of managed account

    As a beginner, most people say, “Why do I trust my funds to other people?”

    Good question!

    There are a lot of reasons to open a managed account. Here are a few of them.

    Hands off approach

    The way to profit in the markets is to understand technical and economic indicators. It can take several years for a beginner to learn the ropes of these indicators.

    As a result, managed forex accounts are suitable for beginners. Behind the scenes, your asset manager will do technical analysis and enter buy and sell orders as needed.

    Don’t require too much time

    A managed account is your best bet if you do not have enough time to monitor and trade the markets.

    Beginner traders can’t afford to spend enough time keeping up with changes in the market, but success in the markets requires total commitment.

    Managed accounts allow such folks to not dedicate much time and let the manager do all the work.

    Keep emotions in check

    Some traders, especially beginners, can’t keep their emotions in check. Such people are prone to clinging to positions that are clear losers. Others find forex trading fascinating and tend to overtrade, blowing the account super-fast.

    If you have such qualities, you should leave your position in the hands of an account manager.

    Final thoughts

    Investing doesn’t have to be hard, and managed accounts are a great way to make trading less stressful.

    Before choosing the broker and the manager for managed accounts, you should do proper research.