Financial success has long been attributed to one’s ability to invest in the right assets. But as much as investing can help you accumulate wealth, it can also be the arm you need to pull you out of the financial ditch that you’ve fallen into. Sure, it doesn’t sound as exciting when you’re trying to generate ROI to pay off debt, but it is a faster way of achieving the financial stability that you seek. Here are five ways to do just that.
Earn Capital Appreciation
The initial amount you invest in a financial market, such as stock or currency, is your capital. Over time, if you have the knack and eye to find and select assets that are undervalued, your wealth will appreciate in value. This is your return on the investment or ROI. By positioning yourself in the right direction of financial markets, you can accumulate a high ROI that can be used to repay outstanding debt including credit cards and mortgages.
Claim Investment Losses on Your Taxes
If things don’t pan out the way you expect them to and you start to accumulate losses on your investments, you can declare these losses as deductibles when filing your taxes. Investment losses also referred to as capital losses, can only be declared if they are “realized” or, in other words, when you liquidate the losing position. If you plan on deducting the stock into this year’s tax form, make sure you sell the asset before December 31 otherwise it rolls over to next year.
Earn Dividend Yield
Some companies pay out a dividend, or portion of profits, to their shareholders. The amount is usually small and is expressed as a percentage of the present value of the stock. Nonetheless, with enough shares in a company, the dividends you earn from your portfolio can reach a substantial sum. Fortunately, these days it’s quite easy to find companies that pay dividends to their shareholders on a regular basis. With a bit of online research on sites, like Finviz, you can narrow down options based on dividend-paying companies and other investing criteria you may have.
Boost Your Financial Confidence
According to Sean Seshadri, an experienced investment specialist, most people who suffer from vast amounts of debt usually also suffer from lack of financial confidence and responsibility. Lacking self-confidence in your ability to manage your finances can then create habits that lead to debt, such as failing to develop and follow a budget and overspending. By deciding to invest your money, you are taking better control of your finances and acknowledging the fact that you want to improve your financial situation.
Turn it Into a Career
Most investors with years of experience under their belt choose to sell their highly refined skill set in finding profitable investment opportunities to others who are less experienced. If you manage to build a good investment track record, you can join social investment platforms and sell your investment signals to your followers.
Investing has helped millions of people, like Sean Seshadri, create sustainable wealth for themselves. If you want to get out of debt and become financially free, start investing your savings rather than have it parked on a savings account that pays a measly amount on annual interest rates.