If you want to become wealthy, you’ll need to do more than simply earn money. Most importantly, you need to hold onto the money you earn. And then, you need to grow your money. In order to grow your money, you need to learn how to invest. Best On-Call Financial Advisory Portal, MoneyMindz.com is here to guide you.
As you learn to become an investor, you will begin to devote your limited resources to the things with the largest potential for returns. That may be paying down debt, going back to school, or fixing up a two-family house. Investing allows you to significantly grow your money over time thanks to the power of compound returns.
When should you invest?
Now that you know why you should invest, how about when to invest? The answer to that is pretty simple. The right time is now. Investing sounds more intimidating that it is. Yes, there’s always a potential risk for loss, but there’s an even bigger potential for serious gain. Doing anything for the first time can be terrifying, especially when it involves your hard earned cash. But here’s some advice for first time investors.
Risk vs reward
It’s true: Investing involves risk. We’ve all heard stories about investors who lost half of their fortunes in the Great Depression or even more recently in the Great Recession. We’ve heard about the Bernie Madoff’s of the world and investors who lost everything to a scam. Although you can never eliminate risk entirely, you can significantly reduce risk if you invest wisely. The great thing about investing young, is you’re likely investing in longer-term investments—like your retirement account. These investments are less risky than quick-fix stock trading by people who really don’t understand what they’re doing.
While investing can be risky, it’s best to just deal with that risk, because not investing can cost you a lot more money than losing a little of money on a bad investment.
What do you invest in?
The most important factor in being a successful investor is not the stocks and funds you pick. Successful investing depends on:
1. Choosing proper asset allocation – the overall mix of bonds, stocks, and cash you hold in your portfolio.
2. Making and sticking with an automatic investment plan – this way you avoid making terrible, emotionally-charged decisions—like selling at the bottom of a market crash.
The most common types of financial products where one can invest can be listed below:
A mutual fund is a type of professionally managed investment that pools your money with other investors. The fund’s managers then use the pooled money to buy securities for the group.
It’s best to start out investing in mutual funds or exchange-trade funds rather than individual stocks and bonds until you get your feet wet. These types of funds enable you to invest in a broad portfolio of stocks and bonds in one transaction rather than trading them all yourself.
They’re not only safer investments (because they’re diversified), but it’s often far less expensive to invest this way. You’ll either pay just one trading commission or nothing at all (in the event you buy a mutual fund directly from the fund company), as opposed to paying trading commissions to buy a dozen or more different stocks.
Whether it’s corporate, municipal or treasury, bonds are a great way to leverage your investment against the success of other entities. Bonds are a debt security which raise capital for others. They finance new companies, local projects and even the US Government. While no investment is risk-free, government bonds (T-Bonds) are just about as close as you can get.
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