It can be gut-wrenching to decide where to put your hard-earned cash when you are first starting out as an investor. There are numerous options available and how do you really know what will give you the best return, if any? The truth that every investor must face is that you will win some and you will lose some. The game is to win more than you lose. The one rule of investing is to never fork over more cash than you can afford to lose while you are allowing your money to work for you.
Goals. You first need to determine what your goals are and then look for ways to achieve them. There are many options, and you will need to do the math and make your plan.
Invest small. You can invest a small amount (less than $100) a month into mutual funds or exchange-traded funds. Time and consistency allow your investment to add up and you can do it at a comfortable pace.
Invest medium. Many mutual funds require a minimum investment of $500 to $2,500 and these are good if your spread your money out over a few different funds. You can spend a few thousand dollars at once, but not all in the same place.
Invest bigger. When you have saved over $10k you might feel as though you are chomping at the bit to make a quick profit. Hold your horses. Divide up your lump sum and put it into the market a little at a time over a 12-month period.
Bonds. Bonds are fairly safe for investing. It basically means you are lending money to a government or a company and they pay you interest. Eventually you are paid back what you lent out.
Stocks. When you buy stocks (equities) you become a part owner of the company. You’ll be able to vote as a shareholder and collect dividends. You only get a return on your investment when the value of the stock increases.
Mutual funds. You pool your money with others into a collection of stocks and bonds. A professional manager does the investing for you based on a specific tactic.
Real estate. Look for foreclosed homes going up on the auction block. You can resell the house down the road for a lump sum profit or rent it out for monthly income.
Gold. Gold bullion may be one of the safest investments you can make. It is held and recognized by every major bank in the world. It is insurance against the fluctuation in paper money.
Start early . The sooner you get started the better your returns will be at a rate of return compounded yearly. At 10%, a $100 monthly investment yields over $300k profit after 35 years. Imagine if you doubles it to $200 a month.