Getting Started in Investments – Part 1.
It’s hard to know where to start when it comes to beginning your investment career or portfolio. Many new investors want to get started before they really learn how to use the stock market. Which is why so many new investors make mistakes and get out before they lose all their money.
The best place to start is investments with no or little risk. While you won’t make massive returns, there is almost no chance that you will lose your money. You will generally be able to get your money out when you need it, which gives you the flexibility to move on once you have learnt a little bit more.
If you are seriously looking at getting your investments going, you need to slowly enter the stock market without too much risk. It’s probably best to start with a conservative investor, who will teach you how to get started. A conservative investment will give you a chance to make a little money with out the risk of the general stock market. You will also get a chance to learn.
Most people don’t think of their bank as a place to start. But much to common consensus most banks have a range of investment programs to get your started. Banks tend to want to look after your money, which in turn looks after their interest, so your funds will be safe.
The first and most conservative place to start is an interest gaining savings account. These accounts have almost no risk, and will slowly grow over time. If you ask the bank that you normally bank at, most will have their own interest savings account. Most of these accounts will have an interest rate of 2 to 4 % but will dock your interest if you take money out of the account – as an incentive. The best way to go is to find an account that offers the highest research without docking. The interest you make won’t be much (unless you have millions to put in there) but it is definitely a start.
The next stop is to look at market funds. This service will also be offered through your bank. The interest will be higher than a savings account, but it works in a similar way. However rather than being a long term investment, market funds are short term investments, which gives you the benefit of not tying your money up for very long.
Next up are Certificates of Deposit, referred to as CD’s. The interest rates on CD’s is again higher than savings accounts and market funds and gets you a little closer to that risk that you crave. CD’s offer some flexibility, allowing you set the duration of the investment. You will be paid interest until your CD reaches maturity at which time you will receive your investment and the interest.
If you are looking at starting out in investments interest gaining savings accounts, market funds and CD’s are an excellent place to start. It will give you a place to start making a little money without any risks.
Most people would at this point get interested in the stock market. After all this is why you started out, right? Most new investors think that they should invest all of their savings, in order to have enough capitol, but it is not necessarily the best idea.
At this point you should start planning your investment future. An investment plan will keep you on the straight and narrow. In order to start your investment plan you need to sort out what you want out of your money.
How much money do you expect make? When do you want to get out? How much can you actually afford to lose? What industries do you know well enough to have an educated guess about? How much risk are you willing to take?
Once you have decided where you sit in the investment game you will be able to figure out how much money you are willing to invest the first time around. You should never invest money that you don’t have or you are not willing to lose.
Once you have been in the game for a while, you will have a little bit more knowledge when it comes to the stock market. You will become more interested in risks. This is not generally a bad idea, but you need a stock education before you start risking your hard earned savings.
Want to know where to go to next? Watch out for Getting Started Part 2.
