Investing – Tips For Your Future

The best investments to make with a little bit of money will always depend on your lifestyle. Factors to consider include the stability of your expenses and income so that you can figure out what amount of money you have to invest, your age, how likely you are to need the invested money in the near future which will determine how liquid you need your investment to be and how much risk you can tolerate with your investments which will determine how much you can lose on your investment. The general rule is that the less risk, the less you’ll earn on an investment. Today’s interest rates are extremely low on investments so that you will earn very little money on traditional investments such as putting your money into risk-free vehicles such as a savings account, CD, or money market.These vehicles remain safe ways to invest your money with no risk of losing the money you put in. Purchasing savings bonds or other bond issues from the Treasury will pay a bit more but typically tie your money up for some period of time. If you work for a company, your best investments may begin with your company. Companies usually include retirement options that include matching 401K contributions. 401Ks are retirement accounts. When your company gives you the option to invest in a 401K examine the matching the company makes which represents the amount of money the company contributes to your retirement account. This can help your investment strategy because the only way to make more money when interest rates are low is to invest more money in your safe financial product. For instance if you have $100 to invest, you will make less than one percent interest on your investment but that one percent of interest is more money if you have $200 to invest so that matching is helpful. Your investment in a 401K will include types of investments such as a stock 401K made up of stock purchases, mutual fund or money market. Within the 401K, the type of investment you make with that money will determine the risk you are taking.For instance, individuals who invest in company stock with their 401K money can still lose that money when the stock goes down. This is what happened to people at Enron. If you invest in a money market account, you will earn less on your money but the money will be safe. If you have the opportunity to buy stock in incremental amounts whether from your own company or another company that has such options called Direct Stock Plans, you can invest in a company’s stock for very little money, sometimes as little as $25 a month. By omitting a stock-buying service and by linking your Direct Stock Plan to a savings or checking account, a certain amount of money will be taken out of your account each month to invest in a company. The difference between being an employee and participating in your company’s stock purchase plan and an outside investor is that employees usually get some discount on stock price, such as five percent. As with any stock account, you can lose everything you invest. Mutual funds that allow investors to open an account in $100 increments are a way for individuals to invest in stocks with less risk than buying individual stocks.These investments depend on what type of companies they invest in and you can research the risk of your invested money. For instance, those that invest in the top 100 US stocks are less risky than those that invest in emerging markets, usually. It is important to consider whether the mutual fund charges fees to you to open, maintain or close your account. You can lose all your money in mutual funds but because they invest in a variety of companies they are typically considered not as risky as individual stock accounts. A Roth IRA is a good investment vehicle. This type of account is a retirement account but only the money you earn on the money you invest is tied up until you are 59-and-a-half. You can set up a Roth IRA at any financial institution. It is funded with after tax dollars. You can start your Roth IRA with very little money, usually from $50 to $100.

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