Beginners Investment Guide This Summer at Simple Debt Relief

Beginners Investment Guide This Summer

Posted by Darrell M on August 26, 2010 Leave a comment (0) Go to comments

If investing is something new for you, it is best to follow a guide by those who have done and done it successfully. It can be complicated, but it really doesn’t have to be. By following this guide, you can determine your investment budget, know when to buy, and put your money to work for you.

How much you should invest

A good investment strategy depends on how much money you want to start with investing.

If you have only $50 a month to work with, you can do something with it. You could make small investments into mutual funds or even exchange-traded funds.
If you have a lump sum of less than $10,000, you options open up more. Since most mutual funds have minimums concerning their investment requirements (usually $500 to $2,500), you could invest in them. However, do not put all your money into one fund- the same as putting all your eggs into one basket. Try to invest in 5 or 6 different mutual funds; so, say, for instance, if the U.S. stock market isn’t doing so well, your holdings in real estate or international stocks may keep your portfolio in good shape.
If you have a lump sum of $10,000 or more, you have even more options. Don’t jump in all at once, for the stock market may be about to go down. Use the same approach as for lump sums under $10,000 at first.

Try a one-fund option

Starting off with one mutual fund is great for most new investors, for it is a wonderful option if you don’t have a big lump sum to invest. Consult a mutual fund company to help you decide which mutual fund to invest in. Some mutual fund companies can help a beginner like you to put your investment into a one-fund solution, which they are the owners of it.

Some funds are designed for your desired retirement age. A Fidelity Freedom 2030 (FFFEX) fund puts more of your money in stocks now and puts more of your money in bonds as you get closer to retirement.

A T. Rowe Price is a safe way to invest money, for you can invest as little as $50 a month. All you have to do is add $50 more each month.

Building a portfolio

Although you are a beginner, you can start a portfolio. You can choose 5 mutual funds, covering your investment bases. Invest in companies of different sizes and in various parts of the economy and invest in other parts of the world.

It is better to build a portfolio on funds. Look for one with consistent performance, lower fees, and an investor-friendly mutual fund management company behind it. You can start a portfolio with $10,000.

Accounts

401(k). Many employers offer a 401(k) or something similar. Take advantage of it by investing in it. For you can earn free dollars that the company will match.
IRA. Make biggest investment for an IRA, which allows this money to grow tax-free until retirement.
529. These are great to start putting away for your children’s college expenses.
Brokerage account. These are good if you have goals for your money within 5 years. This is good for a vacation fund or just plan upgrading your home. Choose a good brokerage company by consulting.

Just follow these steps for a beginners guide to investing. Make the most of your savings and start planning for your future or the future of your kids.