While focusing on your investing ability is a worthwhile pursuit, it nevertheless makes sense to save as much money as possible. Not only does this mean that there is more capital available through which to generate high returns on the stock market, it also provides greater financial flexibility should the world economy experience a difficult 2017.
With a new US President, a slowdown in China and problems in Europe, saving money could become a crucial part of investing this year. That's why adopting these two approaches to your personal finances could prove to be a prudent move.
Perhaps the most challenging aspect of saving money is not spending it when you have it. In other words, people often learn to live quite happily and comfortably with the salary they earn, whether this is relatively low or relatively high. As such, spending is sometimes undertaken simply because it is possible, which means that if that opportunity is taken away then it could lead to greater savings in the long run.
One way of achieving this is to set up an automated transfer of cash from the account into which your salary is paid. This could be even a modest sum. If it is done on the same day that the money arrives, it will ensure that it is not spent and the chances are that you may not even miss it. It could be transferred directly into your sharedealing account and invested in small chunks in stocks for long term growth.
Sharedealing providers usually have facilities which allow for small, regular investments. They often come with lower commission rates, which means that any returns which are made are unlikely to be eaten up by higher costs from investing more frequently.
While shopping around may sound like an obvious way of saving money, it is becoming easier to do thanks to technological change and innovation. For example, the internet now makes life much simpler, with apps such as Earny providing innovative means of making sure you don't pay more than you have to for purchases.
The app works by watching purchases made on Amazon and will automatically claim back any difference in price should the item(s)be reduced in one of the top 50 online stores. The customer does not need to do anything to reclaim the difference as it is automatic, and provides a price protection guarantee with minimal effort for the consumer.
Of course, a more traditional approach can still end up with a similar result. Certainly, it may take time to search other stores for products, but this could prove worthwhile over the long run. It could allow for a greater sum of money through which to invest in shares, leading to higher returns and greater financial freedom in future.
Could your savings turn you into a millionaire?
Of course, finding stocks that are worth adding to your portfolio is a tough task, which is why the analysts at The Motley Fool have written a free and without obligation guide called 10 Steps To Making A Million In The Market.
It's a simple and straightforward guide that could make a real difference to your portfolio returns. As such, 2016 could prove to be an even better year than you had thought possible.
Click here to get your copy of the guide - it's completely free and comes without any obligation.