A nest egg is, for all intents and purposes, saving your money in a “nest” to secure income and investments for the future. However, building a nest egg isn’t always as simple as 1-2-3 but there are many actions you can take to give yourself the best possible chance of a well-performing, successful future.
The following will list the five best ways to build a nest egg, what the purpose of a nest egg is, and general information that is important to note while going about your “building.” So, without further ado, let’s learn about how to build a nest egg!
The Five Best Ways To Build a Nest Egg
1. Can Savings Save You?
Something that is not mutually exclusive to each individual person is, and will always be, the need to save money. Savings don’t care about someone’s background, education, gender, wealth, or any other exclusionary factors — all that matters is how smart a person is about their money and how they intend to use it.
You’ve likely heard “you need to save more” and “you should put [insert percentage here] of your earnings into savings” relentlessly from other people before. Family, especially, might take it upon themselves to have an opinion on your money… but, ultimately and legally, the reality is that you have the final say on what to do with the money you’ve earned and invested. Because of that, the decision how to build a nest egg is left up to you.
Savings work best when you follow a strict regimen, one that fits your lifestyle and earnings — building up and not falling into debt in order to provide yourself with the best retirement possible (or other savings goals you aspire to). In the end, savings can, in fact, save you.
2. How Does a Bird Build Its Nest?
Learning from the expert tends to be the best way to understand and perfect things. Take the work put into building a bird nest (and the process that goes into building them) as an example. Birds have been building their own nests for hundreds of thousands of years, even millions of years, and have gotten the process down to a science.
The very first thing a bird will do is find a good location. Where is the place you wish to settle down in or are currently settled down in that offers good resources? Humans have it lucky due to our own craftiness, but some locations are, ultimately, more suited to our way of life than others. If your job is in the city, typically you’re going to choose to live in the same city to save on transportation and other preliminary costs.
Then the bird needs good material to make its nesting area stable. This can be translated to the assets and opportunities that humans use in order to secure their life savings. This includes asset protection, professional advice, and all the research that goes into building your nest egg.
The last step is the securing of the nest and the watchfulness a bird does to give its eggs the highest chance of successful hatching. Savings isn’t about making one choice and then throwing away the key. It’s about perseverance, intent, and following through on the promises you’ve made to yourself.
3. Are Investments a Good Way To Build a Nest Egg?
The short answer is, as with most things in life, it depends upon your individual situation. Bond investing, stock market trading, and real estate investing are just a few of the many ways to invest, all of which have their own pros and cons.
Bond investing has many forms, some of which are in the form of government bonds, municipality bonds, or corporate bonds. Bonds are a way for the said recipient (government or corporations) to repay loaned money (with interest) to the bonder (you). Bonds tend to be safer than the uncertainty of the stock market and the riskiness of real estate investing. The biggest issue is that a bond must "mature" to offer the full investment back, which can take anywhere from a few months to over three decades.
The stock market offers a large variety of companies to choose from. Typically through a broker, you can purchase "shares" of a company and watch your investment rise and fall, depending upon how the chosen company does economically. Yet, it is important to keep in mind that the stock market is a large and competitive system that truly is a beast of its own. If you wish to purchase shares, ensure you know what you're doing and why you are purchasing the particular share that you've chosen.
Real estate investing tends to be the riskier of the three but can also offer a much bigger pay-out in the end. Working with an organization or a group of people offers less strain on your particular investment, but the investment can also come from a process known as "house flipping" which, when done right, can offer a massive pay-out. Real estate investing, however, tends to take a lot of money to get started with and takes a time-consuming amount of work to maintain.
4. Don't Fly Into a Window
It is a natural phenomenon that, if a bird is trapped in a place with glass walls, it will attempt to fly through the glass to get to the other side. The end result is, unfortunately, a hurt bird and, quite possibly, a damaged window. Why?
Well, there are all sorts of scientific reasons (such as the way birds see in comparison to humans), but lacking the simple knowledge that glass is a solid object means the difference between getting into and staying out of trouble.
This is perhaps one of the most important steps in growing your nest egg — never invest in something that you don't believe in or suspect is a scam. In situations like scams, all invested money is immediately lost.
And, even if you do get back your money, the time that could have otherwise been used to make a proper investment is wasted. Be very careful who you trust and make sure they are an official, government-approved organization before giving your money to anyone.
5. Other Ways To Make a Nest Egg
Let's say that investing really isn't the route you wish to go. Investments come with an inherent risk factor that some people simply don’t want to mess with.
While you are working, assuming your company offers employee benefits and you are working full-time: 401Ks, IRAs, and general, day-to-day money-saving will help you build up your nest egg in time. Risk doesn’t need to be involved, assuming your saving is done officially. This is also where a good financial plan is imperative, acting as a guide and “law” for you to follow, through all financial ups and downs.
How To Prepare Yourself for the Money-Apocalypse
In late 1929 and nearly all of the 1930s, the Great Depression came to be known as one of the worst economic recessions in American history. The stock market crashed, the Dustbowl struck and destroyed crops, and an overbearing amount of jobs turned to mush due to the insane amount of damage the overarching economic crisis caused.
How is this related to building a nest egg? Simple: if you want to be prepared for all circumstances, you must be willing to prepare for the worst. Saving money may very well save you in the future.
Emergencies, such as your car breaking down, hospital bills, pets falling ill, house damage, and other unfortunate events can force even the most prepared savers to change their spending agenda. In situations like those, that something special or “splurge” you wanted sometimes has to be postponed. And that, unfortunately, is just a fact of life.
Thinking that a financial crisis will never happen to you is wishful, at best. Things happen that can sometimes be so easy to ignore, especially when you are well-off and have a lot of extra money laying around. However, there are certain facts about saving money that may come as a surprise.
For example, an unsettling amount of lottery winners declare bankruptcy within the first few years of winning, often because they weren’t money-smart to make a financial plan and ask for assistance from professionals, as much as they should have. The temptation of spending a sudden influx of earnings/winnings can be very difficult to dissuade, but it is essential to not allow desire to become a counter-saving demon.
Conclusion
The successive action to take is for you to start a spreadsheet or a journal of your personal finances, and talk to a professional banker or broker about the best plan of action moving forward. Build your nest egg now so that when the future comes barrelling towards you, you’re prepared for whatever comes your way.
Sources:
Great Depression History | History
What Is a Nest Egg, and How Do You Create One? | Finance Strategists
