To answer the question of, "where do I invest my money" begins with answering these three questions:
1) How much money can I truly put away without needing it?
2) How long do I want the money invested?
3) How much risk do I want to take?
Keep these three questions in mind when you read the following:
A smart investor knows that there is one true law that should be followed and that is "diversification". I learned this the hard way by putting $1,200 into my very first stock when I was sixteen... I still hold the stock and it is worth about 70 cents now -I learned a few lessons there. Below are the most common places to put your money as a new investor.
The Bank Account You're Most Likely Using:
This is the regular bank account you've been using for years. You make such a minimal amount of interest that you might not even know your getting interest. You need to take your money out of here.
Risk = 1
Return = Retarded (not making fun of those who are actually retarded)
Time Monies Tied-up = none
A Better Bank Account:
How much money are you making on your interest in the bank? Less than inflation? You're losing money! Look into putting that cash into an online bank account that will pay you at least the rate of inflation. They are very safe, user friendly, and widely used in the know-how financial world... just make sure it is FDIC insured. You can check one out at dollarsavingsdirect.com -it is the one I use and bounces from 1 - 5.5%.
Risk = 1
Return = 2
Time Monies Tied-up = none
Certificate of Deposit (CD):
A CD is a bank account that you can't touch for a certain amount of time. The money sits there getting interest until the CD's maturity. Most CDs don't have very impressive return rates and if you have to pull your money out before the maturity date then you get penalized and you can say goodbye to any money you thought you'd make.
Risk = 2 (can't pull money out)
Return = 1.5
Time Monies Tied-up = depends on the CD. Usually six months to five years.
Stocks:
Depending on the market, stocks can be riskier at some times than others. In 2009 the market would jump 300 one day and then falls 200 the next; not many people can stomach this excitement. If you are one who wants to get into the market and play this game but don't know how to start, then go to http://www.scottrade.com, it's cheap, good, and helpful. If you let me know your doing this before signing up I can give you a code that gets you three free trades. The larger you invest in each stock the better due to the marginal decrease in the commission percentage (Scottrade is $7 per trade at the time of this writing, so it isn't really worth it to invest less than $700 per stock because at $700 you'd still have to wait for the stock to go up 2% before breaking even.)
Risk = 3 - 5
Return = negative - 5+
Time Monies Tied-up = you can sell anytime you want. The only problem is knowing what time is best, so you have to do research. One scary thing is if the stock falls you may want be tempted to hold onto it until it comes back up, but who knows when, if ever, the stock will return. It's a game.
Mutual Funds:
They are safer than investing in one stock because the fund invests your money over a large number of companies; this diversifies your risk. In many funds there are low minimum investment, like only $250, so anyone can start doing this. There are many publications that analyze and rate which mutual funds are the best, check out one of these publications and find out how to buy into it.
Risk = 3 - 4
Return = negative - 5
Time Monies Tied-up = same as the stocks, however you usually want to stay in mutual funds for a long period of time (longer than one year) to take advantage of tax benefits and dividends.
In Conclusion:
Take that $2,000 that you don't need for a few years. Put $500 into the online bank account, $800 in a mutual fund, and take $700 and go get some excitement in the stock market (even if you loose a little money you will learn some great lessons, you will get in better tune with the market, and you will have some fun).
Like always though... only the proactive make any money, so unless you actually act and do something about your finances you will never become wealthy. Do some due diligence yourself and start getting your money to work better for you. The more you learn the more you earn.
Kyle Nau, MBA
Born: La Jolla, CA
Resides: San Diego, CA
Office Manager of:
- Nau Builders, Inc: specializing in custom home and multi-family development in San Diego.
Owner of:
- Break the Ceiling Consulting: start-up and small-business management consulting in San Diego.
- Nau Real Estate: real estate brokerage specializing in investments for young adults.
This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.
沒有留言:
張貼留言