Where to Start
The first question you need to answer is, “What type of investment am I looking to make?” This is very important, as it will play into your decision on where to invest your money. Are you looking long term (more than 10 years)? Alternatively, are you looking short term to make a few bucks and get out? The other important question, “How do I intend to finance these investments?” Once you have these answers you can decide which market to put your money.
After deciding to make an investment, it is probably a wise decision to find a financial advisor that can help you get started, and even manage your investment portfolio. On the other hand, you can do it yourself; all you need is a computer.
Which Market? There is More Than One?
Yes, there is more than one market to choose from the stock market, bond market (private and municipal) and mutual funds.
The stock market is where you will make long-term investments by buying shares of companies. Investors or shareholders actually own, even though it may be small, part of the company and are entitled to a portion of the profits. The stock market has many up and down turns. It is for this reason you will want to invest long term here as the market always improves with time.
The bond market can be used for both long and short-term investments. When you purchase a bond – private or government – you loan money to the seller for operational costs or specific projects. Bonds are sold with a set interest percentage. When the bond matures, you get your money plus the interest. Bonds provide a steady income stream for people.
Mutual funds differ from the other markets. In a mutual fund, thousands of people invest small amounts of money with a fund manager. The money is then invested in a variety of stocks, bonds and other securities. A manager that handles his or her client’s money well can make a lot of money for their clients.
You Are Now Ready
Not really, but this is just a small snapshot of questions you need to ask and options available for you to invest your money. Deciding to invest your money is always a smart decision. Where to invest it becomes the problem, but with some research and asking many questions you can minimize your risk.