I feel like I am not being a very good steward of my money when it is just sitting in a savings account. I would like to find out how to simply get in the game. It is all so mysterious to me and I need help. I need to find someone who can help me know how to invest wisely.
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Where to start
There are 4 basic questions that every investor needs to be able to answer.
1. How much money do you want to invest?
2. How much do you want to make (a little, a lot, or a fortune)?
3. How much can you afford to lose?
4. How much time do you have to manage your investments?
Your answers will have a profound effect on what kind of investments you need, and how likely you are to succeed.
Three popular investments:
Bonds—When you buy a bond, you are providing a loan, either to a company, or a government. They then pay interest in return. If you buy a few quality bonds and hold them until they mature, they tend to be very safe. They will pay an interest rate around 4% to 8%, and the only way to lose money is if the company goes out of business and can’t repay the loan. This is avoided by buying bonds from strong companies that definitely won’t be going out of business. Most bonds have a minimum investment of $1000 or $5000.
Stocks—When you buy a stock, you’re buying a piece of a company. The price of your stock fluctuates based on how badly other people want your piece. Individual stocks can be very risky, but can theoretically provide you with an unlimited return on your investment. It takes a lot of time to properly research the stocks that you’re considering buying.
Mututal Funds—Buying a mutual fund is kind of like buying a stock, except that you are actually buying a whole basket of stocks. The managers of the mutual fund then handle the buying and selling of the individual stocks. In theory, mutual funds are safer than individual stocks. But mutual funds are also risky.
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