When it comes to investing, a lot of first time investors want to jump right in with both feet. Regrettably, very few of those investors are successful. Investing in anything requires some degree of skill. It's important to remember that few investments are a sure thing - there's the risk of losing your cash!
The Basics
Before you jump right in, it is better to not only discover more about investing and how it all works, but likewise to determine what your goals are. What do you hope to accomplish with your investments? Will you be funding a college education? Buying a home? Retiring? Before you invest a single penny, truly consider what you hope to accomplish with that investment. Knowing what your goal is will help you arrive at smarter investment decisions along the way!
The Start Point
Too often, individuals invest cash with dreams of becoming rich overnight. This is possible - but it's likewise rare. It's commonly a very bad idea to start investing with hopes of becoming rich overnight. It's safer to invest your cash in such a way that it will grow slowly over time, and be used for retirement or a youngster’s education.
However, when your investment goal is to get rich quick, you should learn as much about high-yield, short term investing as you possibly may before you invest. You ought to strongly consider talking to a financial planner before making any investments. Your financial planner may help you determine what type of investing you must do to reach the financial goals that you have set.
He or she may give you realistic information as to what kind of returns you may expect and how long it will take to reach your particular goals. Again, remember that investing requires more than calling a broker and telling them that you want to buy stocks or bonds. It takes a certain amount of research and knowledge about the market when you hope to invest successfully.
Should you invest?
Investing has become increasingly crucial over the years, as the future of social security advantages becomes unknown.
Important Info
Individuals want to insure their futures, and they know that if they are depending on Social Security advantages, and in some cases retirement plans, that they might be in for a rude awakening when they no longer have the ability to earn a steady income. Investing is the answer to the unknowns of the future. You might have been saving cash in a low interest savings account over the years. Now, you want to see that cash grow at a faster pace.
Perhaps you’ve inherited cash or realized some other type of windfall, and you need a way to make that cash grow. Again, investing is the answer. Investing is likewise a way of attaining the things that you want, like a new home, a college education for your youngsters, or expensive ‘toys.’ Naturally, your financial goals will determine what type of investing you do. If you wish or need to make a lot of cash fast, you would be more interested in higher risk investing, which will give you a larger return in a shorter amount of time.
If you are saving for something in the far off future, such as retirement, you would want to make safer investments that grow over a longer period of time. The overall purpose in investing is to create wealth and security, over a period of time. It is crucial to remember that you will not always be able to earn an income… you will eventually want to retire.
You likewise can't count on the social security system to do what you expect it to do. As we have seen with Enron, you likewise can't necessarily depend on your company’s retirement plan either. So, again, investing is the key to insuring your own financial future, but you must make bright investments!
1st Things 1st- Stabilize
Before you consider investing in any sort of market, you should really take a long hard look at your present state of affairs. Investing in the future is a great thing; however clearing up bad – or possibly bad – situations in the present is more crucial.
Getting it under control
Pull your credit report. You should do this once each year. It is crucial to know what is on your report, and to clear up any negative items on your credit report as soon as possible. If you’ve set aside $25,000 to invest, however you have $25,000 worth of bad credit, you are better off cleaning up the credit first!
Next, look at what you are paying out each month, and get rid of expenses that are not necessary. For instance, high interest credit cards are not necessary. Pay them off and get rid of them. If you have high interest outstanding loans, pay them off as well. If nothing else, exchange the high interest charge card for one with lower interest and refinance high interest loans with loans that are lower interest.
You might have to utilize some of your investment funds to take care of these matters, however in the long run; you'll see that this is the wisest course. Get yourself into great financial shape – and then enhance your financial state of affairs with intelligent investments.
It doesn’t make sense to begin investing funds if your bank balance is always running low or if you're clambering to pay your monthly bills. Your investment dollars will be better spent to rectify adverse financial problems that affect you every day.
While you are in the process of getting through your present financial state of affairs, make it a point to educate yourself about the various types of investments. This way, when you are in a financially intelligent state of affairs, you will be armed with the knowledge that you need to make equally intelligent investments in your future.
Along the way, you may make a few investing errors, however there are huge errors that you absolutely must avoid if you are to be a successful investor. For example, the biggest investing mistake that you could ever make is to not invest at all, or to put off investing until later. Make your cash work for you – even if all you can spare is $20 a week to invest!
Excerpted from the book Intelligent Investing.
This excerpt has been edited and condensed for clarity.
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