How to choose the right investment on MyConstant
Yachts, champagne and bankers in tailored suits. These images of living well often come to mind when people hear the word — ‘investing.’
It’s true, most wealthy people are good investors. And most wealthy people become wealthy over time because of good investing. That said, investing is not reserved for a select group — it’s for everyone!
It doesn’t matter if you have a small sum of money to invest or lots — investing is varied and can be done with any amount. You can go long-term or short-term, high-risk or low-risk — there’s no ‘one size fits all’ approach.
Which investment option suits your needs?
But before you choose, you should ask yourself the following questions:
- How often do I need access to my money?
- What is my investment strategy?
- How much do I understand each investment vehicle?
Having an idea of how you want to invest your money and what you expect out of your investment is crucial to any investment plan.
#1 How often do you need access to your money?
Removing your stake in an investment prematurely often results in fees and potential loss of money. This is why it’s important that you consider how frequently you need access to your funds.
Try creating a budget. Knowing how much you spend each month gives you a better idea of how much you can comfortably invest.
If you deposit money into your MyConstant account and you think you might need it often, it’s good to keep it in instant access.
Our instant access product earns you 4% APY with unlimited anytime withdrawals. And since it’s a lending pool, your deposits aren’t immediately pledged to a borrower. That’s why you can withdraw your money anytime — for free.
On the other hand, if you’re fine with your money being lent out for a period of time, then you should consider our fixed-rate, collateral backed loans. In this case, you can loan your money for periods between 1 to 6 months, earning up to 7% APR.
*Note: if your money is in a fixed-rate loan and you unexpectedly need access to it, you can sell your loan on our secondary market.
#2 What is my investment strategy?
Once you know how much you can set aside for investing it’s important to define a realistic strategy. Saying that you just want to ‘become rich’ or ‘make money’ isn’t the best route.
Think of a strategy in terms of numbers. Ask yourself questions like:
- What do I need the earnings for in the future?
- What do I expect to make at the end of the investment period?
- Will I reinvest my earnings?
Try crunching the numbers:
Let’s say you have $3,000 to invest.
If you leave the $3,000 in your instant access account earning 4% APY, at the end of 30 days you’ll make $10.
However, if you’re sure that you don’t need access to your money for that time period, putting it in a fixed-rate loan would be a much better option. For 30 days, earning 6% APR you’ll walk away with $15 of interest.
Creating an investment strategy helps you over time and lets you set clear goals.
A note on debt: debts such as payday loans, auto loans and personal loans usually have sky-high interest rates. Repay all of your debts before you consider investing.
#3 How much do I understand my investment?
Understanding your investment is one of the best things you can do. Even American investor, Warren Buffet, says that ‘you should invest in what you know and nothing more.’
Sure, sometimes people invest in companies that they know little about and strike gold. But in those cases, the investors typically have the funds to lose and not devastate their finances.
This is why MyConstant features numerous investment articles and video tutorials to help you understand our product inside and out.
Explore other investment opportunities
Financial planners advise that it’s important to diversify your investments. That way — if one investment sours — your finances stay intact.
MyConstant should just be a part of your investment portfolio. Once you become comfortable investing online, you can diversify with other platforms such as:
Stock trading — apps like Robinhood and TD Ameritrade have cut out the stock broker and allow you to trade stocks, ETFs, options and crypto directly on your phone.
Real estate crowdfunding — this is a way of raising money for real estate investment by getting a pool of investors to contribute money towards a project.
Robo investing — robo investors provide digital financial advice based on algorithms designed by financial advisors and scientists.
Everyone is unique and the best investment is the one that works best for your unique objectives and tolerance for risk. To learn more about investing check out our blogs and if you have any questions about our platform contact us at [email protected].
The information in this article is provided for discussion purposes only and should not be relied upon as investment advice. It’s important that you do your own research before making any investment based on your own personal circumstances.
Share this article