As a digital nomad, you enjoy the freedom and independence of working from just about anywhere. As long as you have an internet connection, you can travel and explore while you earn a living.
But for true independence and freedom to continue living this lifestyle without worrying about expenses, you must take care of your finances. One great way to increase your income and save for the future is investment. Making your money work for you instead of focusing solely on saving is a great way to build wealth, the word “investment” may sound overwhelming to some people who don’t know where to start, but don’t worry, we’ve got you! In the digital nomad’s guide to investment below, you’ll discover 5 strategies that can help you secure your financial future.
1. Diversify your investment portfolio
Investing can be risky, but it can also be gratifying. If you’ve heard the old saying, “Don’t put all your eggs in one basket,” this is one area of life where those words ring true. When you focus solely on one type or class of investments, and things go wrong, you risk losing everything. This scares most people from investing, but mitigating such risks is possible.
You can lower the risks of single market or industry crashes by investing abroad and choosing industries and companies of different types. For example, you could diversify your investment portfolio further by investing in a mix, like stocks, bonds, property, and crypto market making.
2. Try active investing
Newcomers to the world of investing tend to limit themselves to passive investing. They will purchase shares and rely on fund managers to administer these investments on their behalf. Passive investors usually hold onto those same investments long-term, afraid of trying new or risky moves.
Active investing, however, is more dynamic. It entails regular research into stocks that are performing well or are predicted to perform well. As the market evolves, it relies on traditional buying and selling of stocks and shares.
Don’t be afraid of active investing. It’s not as risky as it appears, although it can be mentally challenging. If you like the idea of learning new things, and as a digital nomad, you probably do, consider taking a short course in active investing. Alternatively, find a fund manager that follows active investing principles.
3. Consider real estate crowdfunding
Exploring the world and working on your terms frees you up to have multiple experiences that enrich your life. A digital nomad is more likely to create a bucket list and make it happen than someone tied to a 9-5 job in a fixed location. You can still realize those dreams you had before becoming a digital nomad, like investing in property. But instead of relegating it to the uncertainty of “one day in the future,” you can do so now through real estate crowdfunding.
As a type of equity crowdfunding, real estate crowdfunding pools funds from multiple investors and invests these funds in property developments. This means you don’t have to commit to a significant investment and can still enjoy property investment with limited resources.
4. Automate your investments
We’re confident you are already a fan of automating your daily tasks. In this way, digital nomads free up much time for leisure, travel, and exploration. So make the most of automation for your finances, too. Recurring investments can be automated, so you just set it and forget it. Set up a stop order with your banking institution and investment portal. The stop order used for trading can automatically execute a trade when a specific price level is reached to limit losses or protect profits.
You may also set up a debit order. This will authorize the bank to release a specific monthly amount to your investment fund manager on a particular date. They will then invest these funds on your behalf.
5. Retirement planning for digital nomads
Are you a digital nomad or a digital expat? Digital nomads usually work entirely remotely, are often freelancers, and may travel from place to place. Digital expats, on the other hand, often work for a particular company but do so in a land that is not their home country. These terms are not necessarily mutually exclusive. The two experiences sometimes overlap, with a digital nomad often transitioning into a digital expat with time. However, whichever camp you fall into, you’ll eventually need to consider your retirement. What happens when you decide to stop working?
Your nomadic and freelance lifestyle disqualifies you from a company retirement fund and most government pensions. Start planning your retirement today, as that time will arrive sooner than you think. Start a private retirement annuity policy with monthly contributions deducted by debit order.
Are you currently following any of these strategies? Let us know!