There is a lot to know about investing. It all depends on what type of investing you are interested in as well. There are many different types of investment options out there. So what is investing, specifically?
When you invest, you are paying in a certain amount of money that you expect to grow with time. Most investments are considered long term investments meaning you will not get your money back right away but if you leave your money in, it can multiply dramatically over time. Types of Investing: Real Estate Investing, Bonds, Stock Investing, Mutual Funds, 401K. With stock investing, many of the younger investors see the market as a way to get rich quick. They are quick to sell off the stock that they have when it goes up or if they see it go down a little, they get nervous and sell it off. If they hold the investment and ride it out, they are much more likely to see it grow.
If you are going to be investing, the key to success is asset allocation. You need to vary your assets by investing in more than one type. So just how do you do this exactly? Well, you need to know what the 4 major types are first.
(1) U. S. Stocks are one. They are represented by the S&P 500 Index (2) Foreign Stocks is another; represented by EAFE Index (Europe, Australia and Far East) (3) Real estate, represented by the National Association of Real Estate Investment Trusts Equity Index (4) Commodities;represented by the Goldman Sachs.
The key to a growing portfolio is finding a balance between the ups and downs of these many assets. For example, if one year stocks seem to be down, real estate or commodities may be up. So if you are ready to get started with investing, what do you need to know? First, you need to decide how much money you have to invest safely.
If you decide to invest in mutual funds, you will be asked if you want a high, medium or low risk stock. If you invest in high, there is of course, more risk involved but if it is successful, you will see much higher returns. If you go with a low risk, you will not lose as much if it doesn't work out but you will not gain large amounts if it is successful. It's really all about how much money you have and how much you feel comfortable with risking.
Whatever you choose, there is really no reason not to invest. There are so many opportunities that can be tried with little investment and little risk of loss. If you are considering it, it is easy to learn a little more about it to form your decisions of which way to go and then invest your money and watch it grow! The money you invest may return money for your college, kid's college, retirement, to buy a house or whatever your needs are. There's no reason not to get started today.
The author has discovered that wealthy people have a different thought process around money and finances. She has been helping people to achieve their financial goals for over 10 years.
Margaret Marabella is founder of Fun Investing an excellent resource site dedicated to information on investing