Investing Dos and Don’ts for Work-at-Home Moms
You might be surprised by the amount of income you can earn with a home-based business. In fact, you could end up bringing in more than you ever did at a boring day-job away from home, depending on your skill, commitment, and occupation. Even if you’re not raking in the dough, but just making enough extra to think about investing, there are a few things you’ll need to consider before you call a broker or set up an E-Trade account. When you know the dos and don’ts that pertain to your particular method of earning, you can begin to determine the best ways to invest your disposable funds for your own future, and that of your family. Here are a few things to consider.
1. Start small. When you’re working with an income that fluctuates, you need to be careful not to over-extend your resources. It pays to have some liquid assets in the bank for a rainy day, so keep a savings going to tide you over during slow periods. This way you can leave your investments alone and let them continue to work for you even if you find yourself short on work for a couple of months.
2. Diversify. One of the biggest mistakes people make with investing is putting all their eggs in one basket. Playing the market is a gamble, but it can be a calculated risk if you do it right. By putting a portion of your money into stocks, some into safer but potentially lower-earning bonds, another share into mutual funds, and even socking some away in a Roth IRA, you’ll have varying levels of risk to minimize catastrophic loss, as well as some funds that you can’t touch until you retire (while others can be liquidated within days).
3. Know your stuff. Unless you’ve been living under a rock, you’ve certainly heard of the Madoff scandal that stripped unwary investors of their money (in some cases, their entire life savings). To avoid this sort of rip-off, you should always be aware of how your money is being invested and exercise total control over the decision-making process (as well as account management). It may be more work, but you’re the one who stands to lose if you allow another person total control of your funds. And if it seems too good to be true, it probably is.
4. Buy a house. One of the best investments you can make is property. This might be a little hard to believe right now, with the housing market still struggling to rebound from the crash that left many families in foreclosure. But in fact, now is the perfect time to buy. If you can get financing, you stand to provide your family with a home as well as show a substantial return on investment down the road when the market improves (especially if you can hang on to it for several years).
5. Think long-term. The problem with investing is that people often don’t see it as a long-term plan for their money. They want to put in a few dollars and then pull them out when they see the slightest increase. This is a mistake. By getting in for the long-haul and continuing to contribute to investment accounts, you can not only earn year by year, you can also end up with a pretty sweet nest egg when you retire, and potentially, a greatly improved inheritance for your kids one day.
Jennifer Kardish writes for J.G. Wentworth, the market leader in annuity loans.
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