If you are new to investing, this can all seem overwhelming. There are many different types of investments in every market imaginable. Some people are more comfortable investing in mutual funds while others prefer to buy individual stocks. It is essential that you research all of your options carefully and then start with a small initial investment. Your broker or consultant should be able to give you investment advice based on your risk factor, your current financial situation, and how much you can afford to put into an account each month. Never, ever invest with money you cannot afford to lose, even if market conditions and statistics seem to be in your favor.
Here are some tips to get you started:
• “Fictitious investment simulators” are available and free. It is really recommended that you practice using any of them before investing real money. Using this type of tool will really help you understand your level of risk factor and how you can diversify your portfolio in the most beneficial way for you. You can also learn from your mistakes when using fake money in a fictitious account so that you don’t make the same mistakes when investing real money.
More tips for investing money to grow your wealth
• Don’t overlook the IRA option. Putting money in an IRA account can be very rewarding, especially if you choose the right account. There are basically two options: Roth and Traditional. With the traditional option, contributions are tax deductible. Roth contributions, on the other hand, are not deductible, but any withdrawals you make in retirement WILL BE tax free.
• Take into account how much of your portfolio should be in stocks. Because of the potential long-term swings, it makes sense that young investors could ultimately profit, as they literally have decades to wait for the terms in these stocks to be of great benefit to them. Likewise, as people age, they tend to reduce their exposure to stocks in order to preserve their capital. However, these are not set rules. Each individual is different.
• Know the warning signs to watch out for. For example, if there is a particular stock that has been dropping steadily over the past 3-5 years, you should probably walk away from it. Just look at the graphics. Plus, it’s pretty obvious that you won’t want to buy stock in a company that is currently under investigation.
The best money investment tips and advice can be found at The Motley Fool. There is a wide range of services, resources, and tools (including free ones) to help you every step of the way.