If you are new to investing and you feel the need to start investing today, learn about the investing basics here with us. But first, let's leave those so called HYIP investment behind because it is not a real investment.
Many people know that they have to invest for their future, but they never do that thinking that investing needs a lot of money. That thinking might be true decades ago, but today, things have changed. Now you do not need much money to invest. Even school children can invest with their pocket money for as small as USD 25 per week.
Considering the economic uncertainty in the last years, everyone should truly consider to invest their extra money instead of wasting it for the newest gadgets or something like that, for instance. Those brand-new cellulars may offer many new features, but if you do not need them and you will never use them, what's the point buying those devices? It would be better if you put your money in mutual funds, CD (certificate of deposits) or even stocks if you are already familiar with that kind of risky investments. In addition, it's a rule of thumb in investing that the sooner you invest, the better.
One of the truest investing basics is: younger people naturally have better advantages over the older ones. It is logical because younger people statistically have more years to live. Of course averagely younger people earn less than their seniors, but their age advantage in the end will redeem it. Moreover, over the years their income will steadily grow. So, if you still do not have any portfolio now, make one today. You may have to start with larger amount of money if you are beyond 35, but you will not regret it later.
There are several steps you should do to build a good investment portfolio. Let's learn about them one by one.
1. Plan your investment strategy
The first step in this investing basics is obviously: planning. Before you make any decision, ask yourself first where you want to be in the future, and how long that future would be. For example, where you plan yourself to be in the next 30 years when you have retired? Where do you plan to spend your retirement years? Or are you planning to marry in the next 5 years? Or do you want to secure tuition fees for your children 20 years from now? All that will help you plan your investment strategy. And in planning, don't forget to account for the details such as the the average tuition fees of the universities across America or the living cost needed in the state where you plan to spend your retirement years.
2. Investment Types
The second step in this investing basics lesson is identifying investment types. There are innumerable types of investment today, but basically, there are only 3 most common investment options.
The first type is mutual funds. This is the most advisable investment types for beginners. Mutual funds investment consists of hundreds, even thousands investors' money pooled and managed by professional fund managers. This strategy enable small investors to have diverse group of investments.
The second most common type of investment is bonds. Investing in bonds is one of the safest investment you can find, as long as you invest in highly rated bonds. By investing in bonds basically you lend your money to the institution that issued the bonds at fixed rate. The institutions can ranged from local companies to multinational corporations, local government, or even the federal government.
Bonds issued by the local government are often called municipal bonds and those that issued by the federal government are called treasury bonds. Corporate bond, as the name implies, are those issued by companies and corporations.
3. Investing
The third and last step in this investing basics is: doing the investment itself. After you know what you want in the coming years (planning) and after understanding the investment types that you can put your money into, now it is time for you to invest.
To invest the money, you can do that by yourself or you can hire a broker or an investment manager. But if it is your very first time to invest, I advise you to use the services of individually licensed agents or a brokerage firms that can help you buy and sell bonds, mutual funds and stocks.
You may have to pay for their services, ranging from $15 per trade for discount brokers to $100-$200 per trade for full service brokers. At the very basic level, those professionals will only help you to make the trades.
But if you wish to do so by yourself, there are now many ways to do that. You can come to a local bank and buy an investment plan (which basically is mutual funds) yourself with your money. This way, you can even buy it for as low as $25 as stated above, and increase your investments over time.
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