Investment Articles

As an online entrepreneur, one thing you learn is that the competition out there is stiff and massive so when you make the first dollar, you deserve one big thumbs up. Now that you’ve minted some money online, my next question is, what are you going to do with it? Buy some online merchandise, pay your bills, save it in your bank account, donate it to a good cause, invest it or plain burn it. Whichever you choose, its still the right choice after all its your money. However, indulge me a little bit and let me show you a different way. I suggest you invest it, why? Because if you invest it, you can still do all the above with your money and some, if not more, of it will still be around to spend when you retire.

First things first, we need to ask and answer each of the following questions:

What is investing?
Who is an investor?
What is an investment?
What do I need to be an investor?
Am I an investor right now?
What should I expect when I invest?

- What is an investment? This is the act of putting money into something, in this case an asset, with the expectation that I will gain something in return.

- Who is an investor? Anyone who takes the risk to investment their money in assets with the sole objective that in the future it will pay back more than what they bought it for. To be an investor you need the financial resources and knowledge on how, where and when to invest.

- What is an asset? An asset is anything that is considered to have economic value. In other words you can exchange it for cash. Simple examples include your car, house, computer, website e.t.c. Cash is also an asset.

- What is a liability? In the context of business a liability is any obligation owed to someone else. Simple example include a loan, unpaid bills etc.

- What is capital? These are the resources required in a business to generate revenue or wealth. Simple examples include money, tools and equipment, premises etc

- What is a share? A share is a single unit of capital. Assuming you have company whose capital is worth $1,000 which in this case is 100% of the capital. A share in that company is worth $1,000/100 = $10.

- Who is a share holder? An individual or legal entity that owns shares in a company. If you own 50% of the company, your shareholding is (50/100 x 1000) x $10 = $500.

- What is a dividend? This is the portion of a company’s profits that is paid to the shareholders. Assuming Company A made $100,000 in profits and its is decided that each share holder will receive $1 per share then if you own 50% of the company you will get $50.

- What is interest? This is the compensation paid for using someone else’ assets or financial resources. Interest rate is usually calculated in percentage.

The one rule of investing you need to know is that there is always a risk involved, you could make or lose money when investing. However, an investor’s job is to mitigate the risk involved and ensure that the chances of making a loss are reduced and those of making money increased.

What are the major investment vehicles available to the layman or beginner investor?

- Stocks or Shares – This is where you buy a part of an existing company, private of public. The return in this class of investment is dividends and capital growth when the stock price goes up or there is a share split or a bonus. These can be purchased at the stock exchange either on the day to day market trading but the best time to enter this market as beginner is when a public company is offering an IPO (Initial Public Offer).

- Collective Investment Funds – In funds, many individual investors pool their money together into a pool fund which the fund manager uses to invest in one or many types of investments like stocks and real estate local and/or off shore on their behalf and also manages the investment portfolio on a day to day basis. The gains made from this portfolio is then divided among the members of the fund depending on how much each has invested into the fund. The biggest benefit in this group is that one gets to invest and benefit from assets, e.g. blue chip counters, that you would not afford if you went into it as an individual.

- Business – Business is the activity of making money or any activity carried out with the main goal being to make a profit. It could be the sale of tangible goods or provision of services. In this case you invest your money in the company that sells the goods and services and in return you get dividends as a shareholder. This is always a good place to start your journey to becoming an investor. There is enough money from the business to start building up an investment portfolio slowly and if you make a mistake and lose money you have a fall back.

- Foreign Exchange or Forex – How would you like to buy currency when is cheap and sell it again when its more expensive. for example if the USD is worth 0.9CAD today, you can buy some and a sell it after a few days or weeks when its worth say 1.1CAD thereby making 0.2CAD per dollar. Suppose you’d invested like a 1,000CAD you’d have made like 100CAD all in one transaction.

Remember, an asset brings income which means the house you live in is not an asset, though your banker might tell you otherwise. However, if you buy a house and rent it out, it becomes an asset. The opposite of asset is liability, so as an investor you should always work towards increasing assets and reducing liabilities. That way your gains increase every day else you’ll be losing money if liabilities are going up and assets down.

Are you an Investor, a Business Owner, an Employee or Self Employed? The investor earns income from his investments, business owner from his businesses, employee a salary working for the business owner, self employed from specialized skills or services to the business owner and investor.

These four individuals ways by which income is earned are part of the Cashflow Quadrant as explained by author/investor Robert Kiyosaki of Rich Dad Poor Dad fame. The Cashflow Quadrant and many more investor self help material available at the Tuwaze Duka. (Duka means ‘a shop’ in Swahili)

I suggest you start by setting some goals at the beginning of the investment journey and then maintain a diary on the investment transactions and decisions you make every day. After several months you can compare and analyze them against the achievements you will have made after several months.

More Free articles available Tuwaze Library.

The recent rise of gold prices and volatility within the economy has begun to challenge the notion of wealth, productivity, and output that many people hold in their minds. The typical situation for most people, is that they think of wealth as being measured in money. For people like Ben Bernanke, money means currency. For people like Bill Bonner, money means gold. However, in both cases, wealth is something much deeper.

Wealth as Money

It is not surprising that most people view wealth and money as being the same thing. After all, your 401k is measured in money, your house is measured in money, and you salary is paid in the form of money. The thing that is important for people to consider is that money doesn’t represent wealth itself… it represents a medium of exchange for wealth. By producing something that is worth one dollar and receiving that dollar, it allows you to purchase something else that is worth one dollar without the necessity of bartering and trading.

The benefit of money to the functioning of a smooth economy cannot be over-stated. However, it is important to understand that the money itself is not your goal. Money is a medium of exchange that makes it easier to purchase the things you want when you want them. However, without a population of people who recognize the value of money for trade and exchange, it is just paper.

Another insidious problem with money is that it can have its value debased by government action. Since the government controls the amount of currency in circulation, it has the ability to influence the price of items through its monetary policies. If the government prints a lot of money in order to finance its spending, it will de-value the money already in circulation. In this scenario, money serves as a superior way to transfer value, but a very poor way to store value.

Wealth as Stuff

Another popular view of wealth is to think of it in terms of things. This is where most gold and silver investors place their sentiment. The fundamental belief is that commodities hold a constant real value while government currencies frequently become de-valued. The general thesis of this belief is quite accurate. Gold and silver are constant value commodities that cannot have their value directly eroded by the Federal Reserve.

However, there is another factor of gold and silver that must come into consideration. Their value is exclusively a product of what other people think they are worth. For most people, gold and silver do not have a very high use value. You can’t eat them, and they don’t directly improve your life in many manners outside of jewelry. They are a store of value that depends on other people wanting to use them as a store of value. Your house represents a store of value that gets pushed up in value when other people wish to live in your area. However, its value is also subject to the willingness to pay of buyers, and can fluctuate very wildly. In this way, a commodity-based view of wealth has some of the same deficiencies as a currency-based view of wealth.

Another view of wealth in regards to stuff is thinking about wealth in terms of consumable commodities. By and large, consumable commodities have a much higher use value than gold or silver, since they can be eaten or used to make clothing, or any number of things. However, the principal deficiency of consumable commodities is that they tend to be perishable. Oddly, the strength of gold and silver is the deficiency of consumable commodities and vice-versa.

Wealth as Economic Resources

Finally we come to a view of wealth in terms of economic resources. Another way of stating this is to say that wealth represents the ability to produce things of value. In the ancient days, wealth came from livestock that would produce milk, eggs, and offspring that were valuable as a source of food or for breeding more livestock. In the contemporary world, a ’share’ of ownership in a company produces dividends that result from the value that is captured through profitable operations. As individuals, our greatest source of wealth is our ‘human capital’… or our ability to deliver valuable services in exchange for compensation.

In most cases, this great source of wealth is not directly valued since it is intrinsic. It does not sit on a balance sheet, and is not tallied in a statement. An investment such a rental property that produces value for the tenants whom pay rent in exchange for the right to occupy the property is a real source of wealth. However, the creative mind that purchases the property and organizes a system for using it to create revenues that exceed the cost of operating plus the cost of capital represents a much greater and much more powerful source of wealth.

In the end, real wealth always is and always has been produced by people who are able to generate products and services that are valued by others. When the value of these services exceeds the cost of delivering them, it results in a profit. For most people, their greatest source of wealth (their human capital) is slowly used to acquire secondary sources of wealth that are not limited by the extent of their personal efforts.

The individual ability that each of us possess may be much greater than any of our investments that we own, but those investments have a very important characteristic. That characteristic is the ability to create passive income… income that does not require constant effort. In this way, wealth becomes a much more complex subject since it is inclusive of both our efforts to produce value and the passive effort of investment vehicles that we own to produce value.

Ultimately, all forms of real wealth must produce value. As we are starting out in life, most of that value will come from our personal efforts. Over time, our personal efforts allow us to invest in vehicles that produce passive value. As more time passes, those investments will generate returns that allow us to purchase more investments in a process known as compounding. This cycle of wealth all starts with a decision to focus on creating value through both our efforts and our investments.

Sincere Thanks, Douglas J Utberg, MBA

“Business, Life, and Everything In-Between”

Many people who are seeing low return on their savings accounts often look to other ways they can increase the returns on their hard earned cash. And why not, money does not grow on trees or anywhere else, and it is only natural that those hours of toil put in at the workplace should translate as a nice profitable return.

Subsequently, many people have looked at the stock market and its various investment vehicles as a way of making the money do the work. One method which is often favoured by all types of investors is investing via an investment fund.

Unless you have an exceptional insight into the stock market, investment funds offer a way of investing into the market without having to pick out individual stocks and shares, which unless you have a good insight into the markets and are a highly experienced player in the game, it is probably a good idea to avoid at least in the first instance.

Investing into an investment fund involves paying into a fund which is already invested into several areas of the market. There are different types of funds which are designed for different types of investor.

A key decision to be made which will affect your investments is how much risk you are willing to take with your money. You are probably familiar with the term risk vs. return and basically the higher risk the potential for a higher, more profitable return. The lower the risk and the return is less but in some instances may offer stable growth.

However, this is a very general description of risk vs. return, as it is possible that a more cautions fund will be prone to high risk factors and vice versa.

If you are an experienced investor you may already know which funds you are going to invest into for the coming year. You will know that a fund can do well one year but no so well the next. Nonetheless, like the beginning investor, you will probably do well to at least obtain guidance on investment funds from a good fund manager.

The key to a good fund manager is to choose one which is happy to only step in when they have to. Many financial companies and advisors step in at every opportunity which is paid for by the investor, and in many instances this is the only reason they do.

Whether you are a beginner, or a seasoned investor, try and find a fund manager or fund management company that is happy for you to have as much control as possible over your fund.

Investment funds offer a good vehicle for investing for the beginner, as well as offering good returns as an investor’s investment.

Richard Teahon writes for http://www.Fundsnet.co.uk which was founded by Chairman Simon Dixon with a view to reduce the cost of financial investing. It offers a variety of financial products, including but not limited to stocks and shares ISAs, consultancy and advice, trust and pension investments, emerging markets, commodities, and unit trusts and OEICs. The product range was created to suit every type of investor.

Socially Responsible Investing – more than a fad?

Fads come and go. SRI might have looked like “flavor of the month” at the first “SRI in the Rockies” conference of 1990, but instead of disappearing, its popularity has increased year-on-year. For last year, the Eurosif (European Sustainable Investment Forum) Report put total SRI assets under management at around € 5 trillion (currently some US $ 7.11 trillion). This includes Core SRI with its positive selection of suitable investments, and Broad SRI with the opportunities that are left after negative screening of unsuitable ones. Any popular investment strategy merits investigation by hedge funds, whose operations are based on reallocating their AUM as returns from different investments vary over time. However, with divergences in investment approaches between hedge funds and SRI, the question so far has been whether they are compatible enough to work together.

It’s not just about money

The dual goals of SRI are to maximize returns while contributing to social well-being by factoring in non-financial criteria. Also described as sustainable or ethical investing, SRI typically champions human rights, social justice, ecological responsibility and corporate correctness. Different forms of SRI have existed for a long time. Refusals to invest in tobacco, arms and alcohol are just some of the historical examples. More recently, corporate greening and respect for the environment are issues that have gained attention. The growing realization by investors of the influence that they can wield on different organizations has led them to scrutinize both investment policies and investment vehicles, and to use that influence to change or boycott accordingly.

Where is SRI headed?

In a word – upwards. The figure for AUM for SRI continues to rise. With strong growth in European and American markets and a sizeable market potential in Asia, projections from organizations like Robeco and Booz & Company are for 25% annual growth and a 15% share of all Assets Under Management worldwide within the next 4 – 5 years. Whether or not the market segmentation remains the same however may be another matter. Today Core SRI is one-third of Broad SRI, the whole market being driven for the most part by institutional investors who hold 92% of the AUM for SRI. Bonds comprise 53% of total SRI assets, and equity just 33% (Eurosif figures for 2010).

SRI returns and performance

How does SRI compare with other investments? There is a temptation to consider SRI as an exercise in investor altruism, where performance is a secondary consideration and restriction in the investment universe leads to mediocre returns. Yet a 2007 study (by Leuven University) on the risk-return of Belgian SRI funds and a 2011 study on French SRI funds (by Capelle-Blancard and Monjon) showed neither underperformance nor over performance when compared to their non-SRI counterparts. Another study by Weber, Mansfeld and Schirrmann showed that a selection of 151 SRI funds performed better than the MSCI World Index between 2002 and 2009. Their conclusion suggests however that in-depth analysis and manager skill is still the most important determinant of performance. If there is any issue, it is that there is no standard approach to integrating SRI into portfolio management. Meanwhile SRI continues to demonstrate respectable returns and more.

A Hedge Fund/SRI stand-off

Pension funds, insurance companies and high net worth individuals are all contributing to the increasing demand for SRI. Hedge funds by comparison seem reticent. In Europe for example (Eurosif 2010), alternatives and hedge fund assets account for a modest 5.6% of total SRI assets. Hedge fund managers have perhaps viewed SRI so far as an eccentric offshoot of alternative investments, while investors have not yet found the alignment they want between hedge funds and SRI. Their problem is not only with the nature of the sectors in which hedge funds invest. It is also with some hedge fund strategy practices like selling short, which restricts possibilities to engage management in the corporations or sectors concerned. Less engagement means less influence and in turn less chance for SRI to achieve its parallel objectives of returns and social justice.

Opening the flood gates

SRI represents an increasingly important potential source of fresh capital for hedge funds. Conversely, if investors want to maximize their influence, hedge funds are a significant lever they cannot ignore. Trading sectors and trading practices may both need adjustment for the two to work together well. The argument for instance that short sales help SRI by reducing the stock price of companies that do not comply with social or environmental standards is short-sighted at best. SRI seeks to encourage compliant organizations, but not to deliberately damage the non-compliant. For instance, when the California Pension Fund withdrew from the Thai stock market in 2002, the Thai Stock Exchange created a SRI fund to protect the better employers from any negative impact.

SRI has also shown itself to be buoyant in the recent global financial woes, growing by 13% in the US between 2007 and 2010 compared to just 1% for other professionally managed assets. SRI has the potential to provide hedge funds a useful diversification of their portfolios and their investor base. In the same way that industrial corporations have often found that going green turns out to be advantageous not only environmentally but also economically, hedge funds may well find that going “SRI” not only satisfies investor demand for social justice, but brings direct financial benefits as well.

Read more about SRI investing and the latest developments in using investments as a catalyst for social change on the blog, The Geneva Globe.

References:

Responsible Investing: A Paradigm Shift Robeco and Booz & Company

European SRI Study 2010 Eurosif (the European Sustainable Investment Forum)

Risk-Return of Belgian SRI Funds Luc Van Liedekerke, Lieven De Moor and Dieter Vanwalleghem

The Financial Performance of SRI Funds between 2002 and 2009 Olaf Weber, Marco Mansfeld, and Eric Schirrmann

The Performance Of Socially Responsible Funds: Does The Screening Process Matter? Gunther Capelle-Blancard, Stephanie Monjon

Geneva Capital S.A. is an independent advisory boutique for alternative investments based in the heart of the Swiss asset management sector. The firm advises investors on a range of responsible investment opportunities including thematic and ESG (Environmental, Social, and Corporate Governance) related funds, and private equity in emerging and frontier markets. Contact Geneva Capital at http://www.genevacapitalsa.com.

Commodities, safe Haven Investments for 2011-2012, have still a long way to go. Despite the financial crisis recently, investors are doubtful about investing in stock markets. Everyone has the question about where the strength lies during 2011 and 2012. They are unaware of the fact that commodities are becoming a safe haven for the coming years.

The reason behind this investment vehicle gaining speed and poise is because of the rising inflation and food cost. In a better economy, many people will gain a lot of fortune through commodities’ sectors. Take for example the commodity- oil; there has been a steep increase in oil prices since many months. The oil reserve is running out and so the prices will stay high for quite some time.

No commodity or market rises in straight line, as a matter of fact, it can be considered as hedge against inflation. Therefore, it can be said commodities are safe haven Investments for 2011-2012. So, at present owning bonds and stocks are a risky affair but owning real assets and commodities can be said as a smart move

Across the continents, food commodities have been traded and distributed to international markets. Therefore, you can gain a lot of profit through them. However, you need to do your home work and research to invest in the best deals. In the historical period, when there was a financial crisis, the countries turned to US. Now, when United States itself is going through a crisis, whom will they turn to?

Some analysts were of the opinion that it is the end of US and the world. However, the return of the investors to capital markets has helped to send the US Dollar and equities to a new height. A self-fulfilling cycle has been created which has assisted in driving the Dollar ahead and has made the commodity prices lower. This benefits the US economy and in turn drives the Dollar rate higher.

It is a known fact by now that these commodities are safe Haven Investments for 2011-2012. Therefore, investors have adopted many ways to own gold and in its many forms. This helps to increase their chances as well as status to have greater power. Gold market has always been popular since the ancient times. However, it is not a clever idea to put “all eggs in one basket”. You should also opt for stocks, real estate and other kinds of investments. This will help you from going bankrupt if one of the markets falls.

The market rate value of gold is based just as the stock markets. Therefore, it is difficult to know the specific factors which influence the market rate of gold. But while investing on gold, you should always choose the gold bullion instead of various other types of gold. Experts can provide gold market analysis that will assist the individual to decide the gold purchase budget. There have been fewer fluctuations in gold prices for quite some time now. Therefore, gold can be said as one of the commodities that is safe haven investments for 2011-2012.

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While binary options trading can be a very potentially lucrative investment opportunity, as with all all forms of investment they do carry risk that you need to be aware of.

1. The first and probably the single most important one for you to be aware of is one you probably already know. And that is the stock market is very volatile. If your retirement account has taken any hits lately you probably notices this.

Anything can affect the direction that it goes. With the recent downgrade of the credit rating of the USA, to whatever military conflict erupts the interconnected global village can bring havoc into any trading portfolio. Remember Murphy’s Law that whatever can go wrong will go wrong. You can name any type of negative event that can happen and the market can go haywire.

2. Binary options can not be exercised until expiry. In other words you’re getting into a trade you can’t get out of. On the other hand though with binary options your losses are limited to the investment and there are no margin calls. And some brokers will give a 15% refund on a losing trade.

3. Another risk in binary options trading is the number of decimal points involved. A vanilla option has two decimal points where a binary option can have to four. So if your trade ends up with 0.0001 away from being a winning trade you lose.

4. A fixed rate of profit. While 71% profit is a few light years better than what you’ll get with bonds these days vanilla options have the potential for triple digit profits. This does have an advantage over taking a second job though. Because if you invest $100 in a trade and you win you get $71. What part time job pays you $71 an hour.

Not trying to scare you away from getting involved with binary options trading as there is real potential for profits. It’s simply that with the right knowledge and an awareness of the risk involved you can make better informed decisions as to what you are getting involved in.

While there is clear and obvious risk in binary options trading if you choose this as an investment vehicle you are well aware of the risk that you are getting into. Other forms of investment often try to downplay the risk which can leave you in shock should something not go the way you anticipated.

For more information on binary options trading Click Here

Individually Managed Accounts (IMAs) and Separately Managed Accounts (SMAs) both offer investors a highly transparent managed share portfolio while avoiding the tax distortions that come with pooled investment vehicles such as managed funds.

However, there are some important differences between individually and separately managed accounts and while they may sound very similar, these differences can have a significant impact on investment performance, suitability, and tax effectiveness.

In General, Separately Managed Accounts are a good alternative to managed funds for many investors, while investors with $1 million or more, are likely to find the features of an IMA more compelling.

Key differences between the two types of managed accounts rests in their approach to building an investment portfolio.

SMAs are constructed with a ‘model portfolio’ where each investor receives precisely the same portfolio, based on a template created by the fund manager. IMAs however, are constructed individually for each investor, although each account will share some common holdings. These two approaches have some important differences:

* Investors in a SMA may buy stocks that have already enjoyed most of their returns, but remain in the model portfolio to avoid realising capital gains tax. IMA investors however will receive a portfolio that is assembled incrementally, as attractive opportunities arise.

* For the same reason, new investors in Separately Managed Accounts will receive a larger position in stocks that have already performed well, while IMA investors are likely to receive larger holdings in stocks the investment manager believes will perform well in future.

* IMAs also provide the ability to tailor the portfolio to the investor’s circumstances. For instance, an IMA manager may place more weight on generating franked dividends for a SMSF, while long term capital appreciation could be more valuable for an investor with a high tax rate. These differences in investment management help produce good after tax results for each investor. Since every investor in a SMA receives the same portfolio, the Separately Managed Account manager cannot factor individual considerations into their management.

* Both structures will allow the transfer an existing portfolio, with the IMA providing some additional flexibility and tax advantages. When importing an existing portfolio into a SMA, only those shares contained in the model portfolio will be retained and only to the proportion held in the model portfolio. Therefore, investors may still realise capital gains when entering an SMA. Conversely, a diligent IMA manager will adapt the existing portfolio over time and with consideration to tax events.

* For investors wishing to exclude individual stocks or sectors, an Individually Managed Account manager will hold alternative positions, while the SMA will generally hold cash in lieu of the excluded positions. This can have a significant impact on the portfolio’s overall returns.

In executing trades, SMA investors will generally receive ‘at market’ prices on their transactions, while an IMA manager may attempt to get best execution and/or exercise discretion over the timing of buys and sells.

Service levels are also different, with Separately Managed Account investors receiving a service akin to a managed fund. while Individually Managed Account investors have ongoing access to the fund manager responsible for their portfolio and will likely receive personalised reporting.

PPM

The job of the investor is to get the highest possible return on their investments. The highest money market accounts are just one type among many that offer investors an option that has both flexibility and a decent possible return. Money market accounts (MMAs) are not among the highest paying accounts available at most banks, but because of the added flexibility and lessened restrictions on the use of the funds in the accounts, they can be a great option

Is a money market account really what I want

Usually, when an investor puts money in the bank to get a high rate of return, they will consider getting a Certificate of Deposit (CD). MMAs will typically return more than a savings account, but they usually return much less than a CD.

CD accounts have many restrictions placed upon them. Usually withdrawals are prevented. If a withdrawal from a CD account is made, the penalties can sometimes be so high that any returns that would have been made on the investment investment will be lost.

Why money market accounts?

That is why many investors choose to open a MMA rather than a CD. Money market accounts at most financial institutions will allow several withdrawals to be made each month.

Investors want the flexibility that come an MMa can offer, especially with the volatility of the present economy. Being able to easily, and without penalty, make withdrawals from savings investment vehicles has a certain level of freedom for which many investors are looking.

Options and features

Be aware, though, that not all MMAs have the same features and options. An investor would be very wise to shop around at different banks to find the parameters that best suit their portfolio..

Rates of returns, even in the highest money market accounts, typically change every day. It is important to consider all of the the terms and conditions that might apply to the account. Limitations on withdrawals, minimum balances, the solvency of the bank and fees are amongst the things to consider.

MMAs are considered a low risk investment, yet they have enough flexibility to be included in the portfolio of most experienced investors. If you are looking to diversify your accounts and include something with great flexibility, but a good solid track record, the highest money market accounts will most likely fit your needs.

Ask your financial planner or licensed professional in your area about an MMA and find out how they will fit into your existing investment needs.

Ed Akehurst is a full time Internet marketer who writes about a wide variety of topics, including real estate and investing. He discusses the highest money market accounts in his blog. If you are looking for investment resources and information, please visit http://highestmoneymarketaccounts.com today.

Now that you are ready to start investing, there are several points you have to consider. The first and most important thing is to define your objectives. In other words, what are you trying to achieve? Many people start investing without first defining their objectives. This is not the right way to start.

The next thing you have to consider is your risk tolerance. Risk tolerance is how you feel personally about taking risks financially and losing money. Your financial advisor should take this into consideration when they advice you. In fact, your investment advisor should ask you a lot of questions.

Your risk tolerance can vary, depending on factors such as age, financial goals, family situation, and income needs. Generally the older you are, the more you want to avoid risky investments. This is because your older years are really meant for consolidating your investments. When you are younger, you have more time for your investments to recover from market volatility, so you can afford to take more risks.

The rate of return on your investment is another point to consider. There are investments which offer guaranteed rate of returns. The downside of this is that the returns may be on the low side, and you may not be able to take advantage of high returns in the market.

Before you start investing, you may want to make a decision whether to use a broker or invest directly yourself. Of course the choice you make will be dependent on your knowledge of investments and investment vehicles.

Many investors work with brokerage companies, mutual fund companies, financial advisors in banks, insurance companies, and independent financial advisors. It is important to note that most of these people work for a commission.

The industry is regulated so that the investor is protected to an extent. As an investor, you of course have to do your due diligence and be knowledgeable about investing.

Many investors choose to open an account with a broker. This can be done online or by physically going to a broker’s office. There is a document called the new account agreement which you have to sign. Again, it is important to do your due diligence and read and thoroughly understand any document you are asked to sign. Responsibilities of all parties should be clearly defined. Ask questions if you need to. Your financial advisor should be willing to answer all your questions.

Are there people out there who will try to take advantage of you? Absolutely! That is why you must ask as many questions as possible, and not take anything for granted. Ask about the fees, liquidity of your investments, penalties for early withdrawal, tax liabilities, etc. You can also ask the financial advisor for references. After all, this is your money!

Another question you need to find out is, “will you be required to put a specific amount of money in your account at predetermined intervals?” This is called dollar cost averaging. Dollar cost averaging is a practice which helps to reduce the impact of market risk.

Get more free information at http://www.smartinvestorsguide.com

If you have ever thought about investing, the biggest question you would probably ask yourself or other people is, “how do I start?” Depending on who you ask, you probably will get some pretty interesting answers. Life consists of people who wish they had, and people who do. Which category do you belong to? One reason some people do not invest is because of fear. They are fearful they will lose their money. They are fearful they don’t know enough about investing to make informed decisions.

In today’s economy, there are so many investment vehicles available for those who are prepared to educate themselves. With the right information, you will not have to be fearful or confused about which investment vehicle to use to build your wealth.

Although there are several investment vehicles available, the important thing for you as a new investor, is not to overstretch yourself. This means that you do not have to invest in every single vehicle at the beginning. You can start to build your portfolio gradually by having just one investment type. You then increase to two, and then three, and so on. You also have to define what investment vehicle you will use for short term, mid term, and long term strategy.

The fact is if you do not save money, you may never become wealthy. Many people have a lottery mentality. To become wealthy, it is not how much you make, but how much you save. Your saving also has to be consistent and habitual.

Now you may say, “but I can barely make ends meet”. The hard truth is that if you never pay yourself (that is save money), then you may never be able to make ends meet.

Creating wealth involves discipline, and may require you to cut down on certain things. If you don’t do this, the sad fact is that you may never become debt free.

Yes we all have to pay bills, but this can never be an excuse not to strive to live a debt free life.

Have a plan to pay off your bills on a regular basis. You will be amazed how much money you will be able to save if you cut out the non essentials. Keep the bills to an absolute minimum. Remember incurring bills keep you in debt, while saving money will make you debt free.

To begin your investment, you can decide that a certain percentage will come out of your pay check on a regular basis.

In order not to be tempted to spend the money, you can arrange to have the money taken directly from your paycheck. If this is not possible, then you will have to set up some form of direct payment from your bank account. Remember, you are paying yourself! You have worked hard, and you deserve it.

Finally you may want to know how much money to start your investments with. This will depend on the type of investment you choose, and how fast you want to build your portfolio.

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