Best investment and debt tips need to be learned by every small and large business owner to prevent financial problems. Proper investment and debt management will also help you avoid the risk of investment losses and problems due to debts. That’s why here are some tips that can be considered in managing debt and investment together.
7 Best Investment and Debt Tips to Try
- Determine Investment Goals
In starting an investment, it’s better if you have a clear goal for what you want to invest. Investment goals are divided into three, namely short term and medium term and there is also long term. When you already have a clear goal, it will be easier to determine the type of investment instrument.
- Understand Your Profile Risk
Before choosing the type of investment instrument, make sure you know and understand your own risk profile. There are three risk profiles, the first is conservative who is so careful that safe investments are more suitable. For the conservative type, it is better to choose investments such as gold, mutual funds or even low-risk deposits.
Meanwhile the moderate type is quite relaxed, so a combination of mixed mutual funds and stocks is more recommended. There’s also an aggressive type if you dare to take risks and don’t panic easily to get bigger profits. For the aggressive type, crypto and stock investments are most suitable because you are confident.
- Understand Debt Types
Balancing debt and saving is very important to do through proper money management so that you can invest stably. One way to manage debt is to be able to distinguish between types of debt, such as consumer and productive debt. There are also good debts and bad debts that if not understood can actually become more complicated in the future.
Productive debt refers to something that produces results, for example business capital, meanwhile consumer debt should be avoided. You must avoid this type of debt, especially the one not providing long-term value so that it’s not risky. Good debt and bad debt are similar to that; bad debt comes from expenses not contributing to your financial health.
- Plan Your Monthly Debt Payment
Make sure you as a business owner know about your debts and make a list of all loans. In the notes, don’t forget to include the interest rate and the amount you have not paid. Also know when the due date is so you can plan the payment as quickly and efficiently as possible.
How to pay off debt should be paid attention to and start by budgeting a monthly debt payment plan. Calculate the cost of debt like other costs and then allocate funds for the debt per month. While the remaining funds can be used for investment or saved for the smooth running and progress of your business.
- Pay Off the Debts on Time
By recording your debt costs, you’ll not forget to pay on time so you can avoid fines and high interest. If you’re quite forgetful because there are many things that need to be taken care of, use reminders. You can also rely on auto debit so that you don’t miss your debt payments.
- Prioritize High Interest Debts Payment
When paying off debts, prioritize payments with the highest interest and once they’re paid off you can feel at ease. Credit cards are one example of high interest debt that should be paid off first. Also, avoid taking on new debts to pay off old debts so that you don’t get overwhelmed.
- Build An Emergency Fund
Best investment and debt tips for beginners include building an emergency fund to avoid going into debt again. Not having an emergency fund will cause problems later on because there are always unexpected conditions. Even a business can experience large, unexpected expenses so you need to set aside money as an emergency fund.
An emergency fund doesn’t have to be too big, but at least enough to cover unexpected events for 3-6 months. At least you don’t need to go into debt which will make it difficult for you to pay it off. Although it’s not mandatory, business owners should have a personal or business emergency fund to live more peacefully.
Best investment and debt tips will help you manage your finances well and not accumulate debt. Because when debt accumulates, you will likely have difficulty setting aside money to invest. So pay all debts on time and the remaining funds can be used for investment.
