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Investing Basics
by Stanley Broughton
http://www.swsinvesting.com
If you are ready to start investing, you are probably
feeling overwhelmed at all the different options
available to you. Should you invest your money in a
high interest savings account, or perhaps a lucrative
technology stock? The choices seem endless, and
without the help of a trusted financial advisor, you may
end up investing in the wrong thing. If you are
investing for the first time, you may want to start off
with a low risk investment such as mutual funds. Keep
in mind that low risk usually means less chance of
getting a large return, but just remember that everyone
needs to start somewhere.
Before you make any investments, look closely at your
financial situation. Do you have any high interest debt
such as credit card? If you do, it makes sense to pay it
off before you start investing your money. Usually, you
return on investment won~t even come close to what you are
paying out in interest. Once you take care of your debt,
you can decide what you want to get out of your
investments.
It~s easy to start thinking about all the money you can
make, especially by investing in some hot new company. The
fact is you most likely won~t be tripling or even doubling
your money anytime soon. You risk losing all your
investment funds if you don~t use common sense and good
advice. Stocks increase in value, but they also come
crashing down.
Because of the volatile nature of the stock market, you
should ask yourself if you can deal the sometimes
stressful fluctuations. Many people will panic if a stock
goes down and sell as quickly as they can, only to see
the stock rise shortly thereafter and exceed the value it
was at before they sold it. You need to be able to
detach yourself from the situation and objectively
decide what makes sense. Start off with a small
investment in stocks to determine if you can deal with
the risk involved.
Investment strategies depend on whether you plan to be in
it for the short or long term. Will you need the money
within the next five or ten years? If you answer yes, then
other options would be better for you than stocks, bonds,
or mutual funds. If you expect to make money from any of
these categories, you have to let your money stay invested.
If you think you~ll need access sooner, then high interest
savings accounts, certificates of deposit, or money market
accounts are more likely to meet your needs.
Investing is serious business and can make a lot of people
nervous. If you plan to try it, do plenty of research and
carefully consider the various options.
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