Basic Investing For Beginner

How to start investing money.

First thing to do when you want to start investing money is figure out what the money will be used for. Is the investment for retirement or a house or college.

I personaly say everyone should start with a retirement investment then start the other ones. If you start a retirement investment first you will need to put less money in it. The power of compound interest will work in your favor. This is the same thing that the banks make money off .

If your company offers a 401 k or a pension try to put as much money as you can in it. Most companies will add some money to your retirement so take them up on the free cash.

Now if you do not have a 401k or pension than a Ira or roth ira is next best thing. A roth ira is tax free when you take the money out. This is great for anyone who wants the full value of thier account when they retire. The regular ira is tax deductable. What ever you put into the regular ira you can deduct of that years taxes. So if you put the $4000 dollars your allowed you can take the money off your taxes. You will have to pay taxes on the money when you retire.

How to start investing money is a very simple thing. First read some magazines and websites that show mutal funds and retirement accounts. You want to compare funds fees and earnings. You should compare a fund or stock by how much it earned in last 5 and 10 years not last 1 or 2 years. Most funds will make money some years but good ones make money most years.

When you find a fund that makes so much money consistantly that is one you want. Funds do not make money every year but good ones make money more times than not. The average percent they make over 10 years shows how good the fund is.

You can start a retirement account with a mutual fund company or buy into a drip. Drips are dividend reinvestment programs. You buy shares in one stock and the dividend is reinvested in that company. They hold the stocks for you and charge a set fee.

Most people try to find no load or low fees for investments. Make sure that you get a investment that makes money over the 10 year period because paying a lower fee and looseing your money is not that good of a deal.

You can ask friends what they invest in and check out the 10 year performance online or in a magazine. Do not get taken in by high paying funds that have been around a few years or have no record past 5 years. Remember the rich and top investment people in the world all do one thing. They buy good investments that pay consistantly. It might not be the most popular topic how your investment makes 10% a year but you will be ahead in the long run and will have less gray hair when the markets go down.

Recap on how to start investing money.

Start a retirement investment first. Even if you only put a few thousand dollars in it before your start another investment for a home or college fund you will be way ahead of most people.

Never think it is to late or to early to invest in a ira or retirement account. Compare funds and stocks by past 5 to 10 years not the fees charged to own them. If you want to make your investments so they will be very secure bonds and tax free bonds offer some advantages or regular stocks.

Read everything you can about mutual funds you want to invest in and make sure they have a good rate of return for last 5 to 10 years. You can find some mutual funds that allow you to start for $250 and have $50 taken from your bank account each month. Most mutual funds want a investment of atleast $1000 so the $250 and $50 a month is easiest way to start now.

The next posts will deal with what type of investments you would like to invest in. From stocks to bonds even drips. We will discuss what advantages each one offers and what is best for you. We will also discuss why you should have mutiple investments instead of just one.

Remember the sooner you start investing the more money you will make in the long run.