July 27, 2013

How to INVEST your INCOME ?

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Stocks , Mutual Funds, SIP's
Sound Greek? Welcome to the 21st century, where more than 70% of people are unaware of the Finance jargons. Lack of quality financial analysts is a problem faced by most newbie's. How to invest ? Basically where to invest ? What are the options to consider? What should one look out for?
Sasha Moran, helps me and my blog readers gain an insight into the plethora of finance. Read on!


Each young person is dare to dream about the amazing things to do with money in future, but only some of them are willing not to leave the task of investing for distant future. Accumulating wealth is not easy at all, and the best time for making the first steps with smart investments is right now. 
Being a student or recently graduated is the perfect time for making wrong turns, but you should take over the situation and make sure to keep some easy tips in mind, which will help you to start building your financial future before the time for leaving campus arrives. The period of establishment of financial stability can be much less stressful if you secure your financial independency. 
Penny Penny Makes Many

Why is it important to save and invest?

Financial success cannot be achieved without planning. Are you dreaming of buying a great car and treat yourself with a nice summer holiday? Well, how are you going to do that if you don’t save money? Once you have your goal and you know what you will be saving for, you can start looking at your saving and investing opportunities.
Waiting to get older to start learning about money is the worst thing you could do. You can experience all benefits of the “compound interest” only if you start thinking about it while you are still young.

Tips for newbies: How to start investing?

First of all, let’s get one thing clear: investing is not meant for rich people only. Those who have huge amounts of money to begin with are not the only ones who benefit from investing. In fact, you can use any amount of money to start investing, no matter how small or big it is. Whatever amount you invest (wisely!), you will multiply it. Now let’s get to the practical tips:
-          As soon as you get your hands on a few hundred dollars that you can live without, make sure to explore your ways of investing and turning them into thousands of dollars, which can turn out to be decisive to your financial future. Make sure to commit yourself to upgrade that small investment with small amounts whenever you can.
-          Don’t forget to diversify! Getting caught up in individual stocks can end up badly. The anticipation of investing large amounts of money into specific stocks can be tempting because they may show a temporary growth, but making diverse investments is usually the smarter choice.
-          Learn a thing or two about risk management! Taking risks is certainly beneficial, but there is a limit that should not be passed. If the risks are endangering the assets you have, then you should think with a cold head and don’t leave allow your future to be determined by chance.

Investment options for a beginner

As a beginner, you have many different options to start saving and investing; you only need minimal capital to start with. Before you even think about investing your money, you have to learn some basic bookkeeping skills that will allow you to construct a budget. Developing financial discipline while you are still young will have an immense impact on your future as a successful person. Here are some options that you can consider when it comes to making saving and investing choices:
-          Mutual funds – you can purchase bonds and stocks individually, but you can also purchase them through a mutual fund by buying shares. Mutual funds are run by professionals who are experienced in choosing investments, and they are always working their best to multiply the pool of money, since they are taking percentages of the earnings. Your money will be (well, relatively) safe in the hands of these professional investors, since they use their knowledge and experience to research many companies that offer bonds and stocks on the market, and they make an informed selection, putting the bonds or stocks into a fund. You, as an investor, can purchase shares of that fund and your investment will fall or rise in value according to the movements on the market.
-          Bonds – selling bonds is a simple operation through which companies can grow more successful and bigger. You can buy such bonds, which in practice means that you are lending some money to the specific company, allowing it to grow. In return, you will receive interests on your investments and the company will promise to return the money on a certain date in future.
-          Stocks – purchasing stocks can be your chance to own a part of your favorite clothing company or a famous restaurant. By purchasing stocks, you practically become one of the company’s owners and you get a share according to the level of your investment.
-          Certificates of deposit – investing your money in a CD can bring you high interests. By purchasing a certificate of deposit, you make a promise to keep your money in a bank for a determined period of time, which provides you with a significant interest.
-          Insured bank money market accounts – this is a smart type of investment, since it provides you with check-writing privileges. The insured bank money market account is not the same as a money market mutual fund, since the FDIC insures only the former one.  
-          Savings account – this is the classical option of money saving. You simply put your extra money in such an account, and the credit union or bank pays you interests. This is a nice alternative because it allows you to take your money whenever you wish to. The FDIC (Federal Deposit Insurance Corporation) insures the savings accounts at most banks, so make sure to verify that you are provided by such protection in the bank you are planning to choose. 


About the Author

Sasha Moran has a degree in Linguistics. She is a writer at  essay on time  with a background in psychology, e-learning, and marketing.

 

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