Economic times are definitely tough now. However, if you have a little extra cash, there’s never been a better time to invest than when things are down. Any investment guide will tell you that now is the time to invest; some stocks and real estate won’t be this cheap again. That said, there’s plenty of risk involved as banks continue to fail and corporations file for bankruptcy. You don’t need an broker or financial services. The best investment guide is a little common sense and a little discipline.
The first step to any good investment guide is to make sure that you’re paying off your debts first. In almost all cases, the interest rates on credit cards and some loans are higher than the potential return on your investments. There are some exceptions – monthly payments on mortgages and car loans can be paid at the minimum, and never pay more than the minimum on student loans, usually the most favorable interest rate you’ll have. On the flip side, it’s unlikely that you’ll find the next Google. Possible, but unlikely. Don’t plan on it, and besides, if you DO find it, you won’t need another investment guide or worry about what debts to pay off when.
The next step is to have a ‘cushion’. The FDIC will insure any CD or savings account in a FDIC-insured bank for the amount of $250,000. This money will return a modest amount, usually around 4% annually. This money is your lifeboat. There’s no such thing as a “for sure” in investment, and if an investment guide or broker tells you otherwise, run. For this reason, guard yourself against potential losses by keep a substantial savings. I recommend 10% of your income. Of course, don’t save 10% of your income instead of paying off your credit cards.
Finally, you’re ready to invest. Again, there is no such thing as a “sure thing”. It just doesn’t exist. The key to investing is to balance the risk and the potential reward. I recommend investing in a mutual fund. I would avoid picking individual stocks or commodities – this sort of investing isn’t that different than gambling. A mutual fund covers a number of different stocks and you gain or lose by the whole group. This protects you from collapses and gives you more chances at a “winner”.
The best mutual funds, in my opinion, are a group of blue-chip stocks, such as Microsoft and Coca-Cola; these are proven companies that have reliable long-term growth. If you still want to try to “beat the market” that’s your opinion; this is an investment “guide”, not a investment “you-must-do-what-I-say”. However, I would recommend something like a 85-15 split between a mutual fund and “playing the market”.
Following these few simple steps provided by James Milne – a firm of Aberdeen accountants – you won’t need an investment guide to save for your retirement, your children’s education, or the life you’ve always dreamed of!