We all know that investing money involves at least some degree of risk but if you don’t start investing in your future you will most likely end up struggling for money. Keeping your money in the bank is fine but if you want to have your money working for you then you need to start investing wisely today to ensure you have a bright financial future.
For the majority of people who have never invested any money before the idea of investing can be a little daunting. we all have friends who claim to know what is a great investment and other friends who will tell you everything you should not invest in. For a new investor a reasonably conservative strategy is advised. All you need to do is start on your investment journey as you will always be better off than if you do nothing.
A great place to start investing is with Mutual Funds, these are investment funds that pool the money of many people and invest in a diverse range of investments. You will have a choice of the type of fund you invest in but after that you have no say in how the fund invests your money as it becomes part of a much larger pool of money. What this means is you get to invest money in a fund that is diversified so you are reasonably sheltered from too much market fluctuation.
The safest funds that a mutual fund company will offer will be the money market funds. These funds pay dividens on interest earned, but as interest rates are currently low they do not offer to higher a return, however they are generally very safe. If you are looking for higher rates of return then you should look at mutual funds that invest in stocks and give higher returns by trading these stocks on the market. Once again you dont need to do anything once you have entered the fund, the fund managers do all the investing.
There are many types of funds but the safest is what is called a balanced fund. These type of funds invest in stocks, bonds and other financial instruments. You should look for a fund that states it has a conservative asset allocation as this will give reasonable returns at an acceptable risk. A fund that is aimed at retirement is usually the safest of these fund types as it will normally invest part of your money in the other funds offered by the company giving a high degree of diversification.
Once you’ve got your feet wet and get used to investing money vs. just putting it in the bank, you might want to add a balanced fund with a MODERATE asset allocation to your list of holdings. Here your mix of stocks and bonds should be about equal parts each, and risk as well as profit potential will be higher. If stocks start looking cheap in the future, consider investing money in a more aggressive balanced fund, where most of your money will be invested in a variety of stock funds.
The future might not look like the best time to start investing money, but NOW has never been an easy time to invest (as I’ve learned in the 20 years I’ve been helping people invest money ). Don’t procrastinate like most people do. Start investing conservatively and expand your wings as you gain confidence. Balanced mutual funds are a great place to start and minimize worry.
Louis J Romney has been a financial advisor for more than 20 years and his investment advice has helped many families reach their financial goals. Louis kimmediatelys that families need to begin investing immediately and that investing in mutual funds is the best place to begin.