Everyone reaches a point in their life when they start asking themselves: when is the right time to start investing? When should I start investing my savings? When should I start looking at real estate investments? The answer is obvious.
Truth be told, the sooner you hop on this journey, the more rewarding it will be. It’s never too early for a young adult to begin investing, especially in real estate. Generally, the earlier you invest, the more time your investment has to grow. As a result, investing early can help you achieve your long-term financial goals, whether it’s starting your own business, retiring early, or even buying your dream house. The main advantage young people have over everyone else is time. That’s why many young people have demonstrated they’re willing to take on risks since they aren’t typically tied to family or health expenses! One of the benefits of investing early is that it fosters financial independence and even better, financial discipline.
Now, how to determine if you have what it takes?
Here are 5 signs that help you decide if you can start investing:
- You understand the basics and make time for research
You don’t necessarily need to be Warren Buffett to enter the game. However, you must possess a strong willingness to allocate an adequate amount of time for learning about investing. Performing your due diligence on the targeted niche, consulting financial experts, and reading books enable you to learn specific lessons from the past experiences of professional investors. In return, this particular knowledge prevents you from making huge investment mistakes and refines your portfolio decision-making.
For example, if you follow up on the latest property market trends in Dubai and attend webinars prepared by professional specialists in the field, you gain a better understanding of how a successful real estate investment can be achieved. Hence, in this case, it goes without saying that you must be aware of the main factors related to real estate investment such as ROI, Net Yield Vs. Gross Yield, crowdfunding returns, and so on.
- You have savings set aside for emergencies
Rule of thumb: Never invest using the money you’re not willing to lose! You should always have extra money on the side for unexpected expenses. Anything can happen in life and you’re bound to stumble upon urgent expenses in the coming years. So, to avoid getting into debt or having to pull out any of your investments, make sure to have an emergency fund. This makes it easier for you to comfortably invest freely and diversify your assets.
- You are eager to learn from your experiences
Every type of investment is risky. However, some investments serve as a safer bet than others, i.e. real estate is safer than crypto. If you are someone who acknowledges the risks associated with all types of investments and is willing to uphold that uncertainty, then you are ready. Even if you lose at times, you must learn from these lessons and remain committed. As the great Robert Kiyosaki says, “In the real world, the smartest people are people who make mistakes and learn. In school, the smartest people don’t make mistakes.”
- You want to build wealth
As long as you maintain the right mindset of building wealth and not just being rich, then you are definitely ready to start investing. As explained in a previous blog, being wealthy is defined by your assets and not by the amount of cash you own. So, focus on using your money to build wealth in the long term.
- You have extra cash left after paying your expenses every month
If you consistently manage to keep at least 20% of your monthly income after paying all the bills and putting aside for the emergency fund, then you are definitely ready to start investing. You can easily tell when money is piling up in your bank account. Then, you have extra cash available to be working for you. Nevertheless, it’s important to keep in mind that you don’t have to accumulate thousands/millions of dollars for investing in assets, even if it’s real estate.
So, how is it possible to invest in assets like real estate without having huge capital?
The key here for a wealthy mindset is starting SMALL and thinking LONG-TERM.
Every small amount adds up over time. You can always reinvest your earnings no matter how minimal. With the compounding effect, eventually, your returns will multiply and you will reach your financial goals. Let’s take a look at a real-life example:
If you decide to start investing with SmartCrowd, the first and largest real estate crowdfunding platform in MENA, you have the chance to invest for as low as $500 = AED 2000 in a completely hassle-free process. Using this calculator, you can easily calculate the possible returns you will earn from this amount with real estate. It basically gives you an overview of the speculated property’s value in 5 years. As you can see in the figure below, when investing almost $500, you will have a return of 45.4% over 5 years.
Savings Vs. Investing
No matter how small the amount invested, the value returned is always higher than if kept in your savings account. Interest rate returns you get from savings are marginal when you could be spending them on good investments that generate higher returns. Furthermore, cash value depreciates over time due to inflation, so it’s better to have that capital in use rather than letting it wither away.
The returns will be even better if you reinvest your income in other investments as I can’t stress enough the significance of diversifying your portfolio. Overall, the trick here is to maintain discipline and take advantage of the quality investments offered to you which enables you to grow wealth over time. So, tell me are you ready to start your investment journey?