Investing is essential for everyone without discrimination. Almost anyone can devote at least a little money to investments, be attentive to it and wind up with more money than he or she started with.
The beginning of each good plan is the clear statement of goals. Before paying down high interest debt and building your emergency fund, it would be better to think why you’re investing. Consider how much money you want to have, and in what period of time.
It’s quite helpful to figure out exactly what your investment purpose is before you invest a single dollar. Here’s how to start: Take a piece of paper and list all the things that you are intended to do. In order to organize your goals and future plans you had better use time frames.
Now that you have already your goals and intentions, it’s time to understand and familiarize yourself with the most popular investment instruments.
You will be ready to make an investment only when you have gained a deep knowledge of investment funds and strategies. In the given article we’ll show you the best way of becoming a successful investor by revealing and explaining you the safest means of making your money work for you.
The bigger the amount of money you are going to invest, the more choices you have. Major part of investors make their investments in more than one place, however the way they split their investments differs depending on their goals and the amount of risk they are ready to accept.
Bonds are considered to be some of the safest investment securities around the world. The reason is that a bond is essentially a loan. Because of being such safe investments bonds carry low interest rates. Here investor is the person who’s loaning the money. The most popular bond is a Treasury bond or a T-bill. Buying a T-bill indicates that you’re loaning money to the United States government at a fixed interest rate. You can also buy bonds from local governments (municipal bonds) and businesses (corporate bonds).
Stocks are usually purchased through brokers; you buy pieces or shares of a corporation which gives you decision-making power.
Buying a stock you also buy partial ownership in a company. Stocks are sold as shares, and it’s typical of each shareholder to be entitled to a percentage of the annual profits of the company, called a dividend. However, most people don’t buy stocks for the dividends. They actually buy them as long- and short-term investments.
The price of a share of stock undergoes certain changes. Stock prices may go up and down depending on the perceived value of a company in the eyes of investors and on the value of a company on paper.
The golden rule for investing in stock is to buy when the price is low and sell when the price is high. Historically, the stock market has grown on an average of between 10 and 12 percent a year. This is why many financial advisors consider stock an excellent long-term investment. The stock market is also attractive for short-term, higher-risk investors. With stock prices changing every minute, there’s tremendous potential for a quick profit or an equally quick loss.
Mutual funds are not insured by government agency. They are built-in diversification, some funds have low initial purchase amounts, and you’ll have to pay annual management fees.
Your money is shared with cash from thousands of other investors to be able to buy a portfolio of stocks, bonds and other securities. The advantage of mutual funds is that they make it possible for you to use instant diversity in your investments. Your money is invested in a balanced portfolio of stocks and bonds without getting fees for each purchase.
Gold and silver are considered great ways to store your money and keep up with inflation. They are very liquid and are not subject to tax.
Though stocks, bonds and mutual funds are very popular investments, they are not the only ones. Stock futures and foreign exchange market known as Forex market are also contemporary means of investment. The former includes contracts to buy or sell a certain amount of stock on specific date. Whereas in the Forex market you can trade international currencies.
To sum up it is worth saying that each type of investment has its peculiarities, risk extent and advantages. As an investor you are the one who should carefully scrutinize and find out the one which will suit him more.