If you’re just starting to learn to make money via investments or passive income, you might be overwhelmed. There are many approaches to consider, making it hard to find the one that will work best for you.
Luckily, determining the investment strategy that is right for you becomes less of a challenge after you answer three key questions. Once you have the answers, you’ll find yourself feeling much more confident.
Question 1: What Are My Goals?
Too many people jump into investing and passive income strategies without a specific, clear sense of what their end goals are. They think that simply focusing on “making more money” will be effective.
That’s rarely the case. It’s much better to sit down and take stock of why you’re trying to earn more money in the first place.
For example, do you want to make enough to retire early? Determine what age you’d like to retire.
Want to earn a steady stream of passive income so you can quit your job and pursue your dream? How much money will that take?
Looking to buy your dream home? What will it cost you?
Having concrete goals doesn’t just give you additional motivation, it also makes it easier to strategize. When you know exactly what it is you’re trying to achieve, the path to your goals becomes clearer.
Question 2: What Are My Skills?
There plenty of ways to make money through investments. However, just about all of them require some degree of knowledge or skill. If you’re going to be successful, you should have some experience with your approach.
For example, some people find the best way to generate passive income is to invent a useful product. Then they find third parties to handle all the design, manufacturing, and distribution work.
That’s great for people who have the skill set necessary to invent a useful tool. However, it’s not feasible for those who don’t have the skill set to come up with new ideas for products.
Others earn passive income by setting up websites, attracting advertisers, and hiring others to keep the websites’ content up-to-date. It’s an effective strategy for those who know how to build a website from scratch. If that doesn’t describe you, pick another path.
Honestly assessing your skills isn’t always easy. Even if you’re comfortable admitting your weaknesses, some people find it’s an even greater struggle to identify their strengths.
Take some time with this part of the process. Brainstorm, journal, ask friends and family who you know will be honest to offer their opinions – whatever helps you get a clearer sense of your knowledge and skills.
Once you have your list, start thinking about ways that you can apply those talents to your investment approach.
Question 3: What Are My Resources?
Having some basic skills is necessary if you’re going to be successful in earning passive income. However, that doesn’t mean you can’t learn. If you don’t have the particular set of knowledge or specific talent required to pursue the earnings strategy you desire, then you can still strive to acquire that knowledge or develop that talent.
Before doing so, thoroughly assess what kind of resources you have available to help you achieve your goals. For example, maybe you think you’ve got the right mind for the stock market. You may not currently have experience buying and selling stocks. However, your abilities in other fields and pursuits might indicate that you’re the kind of person who can learn to navigate the stock market quickly.
If that’s the case, find out what tools will help you learn what you need to know. Those tools might be books you should read, or an online course you should take. Either way, when you take the time to truly determine what resources you have on hand, you boost your odds of success.
That said, this is yet another instance in which it’s important to be as honest as possible with yourself. You may know of a great teaching program that will help you learn the essentials of the stock market. Unfortunately, that doesn’t mean you’re the type of person who will be able to learn and apply the info quickly.
You also need to remember that time is a resource as well. If your busy schedule doesn’t permit you to read many books, it’s probably smart for you to pursue an endeavor that doesn’t require you to do a lot of reading.
Again, in the world of investments and passive income, there are many strategies to consider. When you answer these questions for yourself, it’s easier to select the one that will be most useful to you.