Trying to encapsulate the galaxy of investments is a lot like trying to figure out which grain of sand on the beach is your favorite. There are countless options. As a result many people choose blindly and hope for the best.
No need to sweat. Here’s a pocket-sized guide to common types of investments used to grow your money. What you select will be based on your time horizon, investment purpose, and tolerance for risk.
Bonds
Flavors: City, State, Government, or Corporation
How You Make Money: You loan them money, they pay you back — plus interest
How to Research: Standard & Poors or Moody’s
Things to Remember: Bonds decrease in value as interest rates rise. Bond values can fluctuate based on interest rates. Bonds were not mentioned in Madonna’s song, “Material Girl”.
Stocks
Flavors: Endless; be sure to research the company
How You Make Money: Increased share price, and/or dividends
How to Research: Stockpickr.com, Morningstar
Things to Remember: Each stock has a different objective. Trying to time the market and trading a lot can erode your gains. Blue chip stocks are those considered traditional and safe. Stocks are sexy but you can lose your shirt if you approach it like high-stakes betting. See our story, Meet DebtKid: He’s paying off $300K.
Mutual Funds
Flavors: Endless; best for those lacking the time, willingness, or expertise. Broad objective categories include time horizon (e.g., Retirement 2040), risk (e.g. Aggressive Growth), and purpose (e.g., Growth and Income). You can own mutual funds inside a 401(k)/IRA.
How You Make Money: Increased share price, and/or dividends
How to Research: Stockpickr.com, Morningstar
Things to Remember: Load/No Load – a load is a fee, look for no-load mutual funds. Dollar-cost averaging means investing a regular amount at a regular time and riding the fund price highs and lows. Diversification is your friend.
What’s the one thing all these investments share in common? TIME. The earlier you start, the greater your potential for gains.
Have you started investing? If not, or if you’d like to increase the amount you invest each month use Geezeo’s budget tools to find the extra cash you need to meet your investing goals.
REMEMBER: This is a simple overview. The value here is asking yourself – have I invested (enough)? Nobody makes money without action, so, get to it!
June 18th, 2008 at 10:51 am
Great little summary. The important thing to remember about Mutual funds is that you’re basically letting someone else do your investing. Chances are you don’t know as much as the mutual fund manager… but he/she won’t be as impulsive- so you’re not likely to see a mutual fund double up like Apple.
Don’t invest in what you don’t understand.
October 8th, 2008 at 4:59 pm
[...] a World Where Shares are Shared… Growing Money: Investments How Do I Begin Investing Using Socially-Responsible Criteria? addthis_url = [...]
April 2nd, 2009 at 11:11 pm
Haha ^^ nice, is there a section to follow the RSS feed
April 28th, 2009 at 3:37 am
Hi,
very good information here will come back and read more, thank you mate!
regards