Run - Whilst the trader who sold you your brand new car
or mp3 player will provide you with a 30 day money back
warranty, there is no such thing as money back warranty
in stock investment. Once the money's gone,its gone forever
and that could be your life savings.
access to the Internet, you can actually play the stock
market with play money to get a feel for how it works.
Do a search with any search engine for "Stock Market
Games" or "Stock Market Simulations." This
is a great way to start learning about investing in the
Financial Planner - Finally, speak with a financial planner.
Tell them your goals, and ask them for their suggestions,
this is what they do. A good financial planner can easily
help you determine where to invest your funds, and help
you set up a plan to reach all of your financial goals.
Many will even teach you about investing along the way,
make sure you pay attention to what they are telling you.
Types of Investments - Overall, there are three different
kinds of investments. These include stocks, bonds, and
cash. Sounds simple, right? Well, unfortunately, it gets
very complicated from there. Each type of investment has
numerous types of investments that fall under it.
is quite a bit to learn about each different investment
type. The stock market can be a scary place for those
who know little or nothing about investing. Fortunately,
the amount of information that you need to learn has a
direct relation to the type of investor that you are.
There are also three types of investors: conservative,
moderate, and aggressive. The different types of investments
also cater to the two levels of risk tolerance: high risk
and low risk.
Conservative Investors - Conservative
investors often invest in cash. This means that they put
their money in interest bearing savings accounts, money
market accounts, mutual funds, etc. These are very safe
investments that grow over a long period of time. These
are also low risk investments.
Moderate Investors - Moderate investors
often invest in cash and bonds, and may dabble in the
stock market. Moderate investing may be low or moderate
risks. Moderate investors often also invest in real estate,
providing that it is low risk real estate.
Aggressive Investors - Aggressive investors
commonly do most of their investing in the stock market,
which is higher risk. They also tend to invest in business
ventures as well as higher risk real estate. For instance,
if an aggressive investor puts his or her money into an
older apartment building, then invests more money renovating
the property, they are running a risk. They expect to
be able to rent the apartments out for more money than
the apartments are currently worth or to sell the entire
property for a profit on their initial investments. In
some cases, this works out just fine, and in other cases,
it doesn't. It's a risk.
you start investing, it is very important that you learn
about the different types of investments, and what those
investments can do for you. Understand the risks involved,
and pay attention to past trends as well. History does
indeed repeat itself, and investors know this first hand.
Importance of Diversification - "Don't put all of
your eggs in one basket." We have all probably heard
of this advice and when it comes to investing, it is very
true. Diversification is the key to successful investing.
All successful investors build portfolios that are widely
diversified, and you should look at this option too.
your investments might include purchasing various stocks
in many different industries. It may include purchasing
bonds, investing in money market accounts, or even in
some real property. The key is to invest in several different
areas, not just one.
May Bring Better Returns - Over time, research has shown
that investors who have diversified portfolios usually
see more consistent and stable returns on their investments
than those who just invest in one thing. By investing
in several different markets, you will actually be at
less risk also.
instance, if you have invested all of your money in one
stock, and that stock takes a significant plunge, you
will most likely find that you have lost all of your money.
On the other hand, if you have invested in ten different
stocks, and nine are doing well while one plunges, you
are still in reasonably good shape.
Plans - A good diversification will usually include stocks,
bonds, real property, and cash. It may take time to diversify
your portfolio. Depending on how much you have to initially
invest, you may have to start with one type of investment,
and invest in other areas as time goes by.
Your Risk - If you can divide your initial investment
funds among various types of investments, you will find
that you have a lower risk of losing your money, and over
time, you will see better returns. Experts also suggest
that you spread your investment money evenly among your
investments. In other words, if you start with £100,000
to invest, consider investing £25,000 in stocks,
£25,000 in property, £25,000 in bonds, and
£25,000 in an interest bearing savings account.
ie ensure a good spread is achieved.
Honest Johnny -
The Consumers' Advocate.
Author: P. Hata