In order to make it less intimidating to start investing, we are going to explore three popular and successful types of investments – stocks, mutual funds, and real estate – so that you can determine which ones work for you and how to take the next step.
First, you will need to decide how much money you can afford to invest. There is the possibility that you could lose all this money, so it needs to be part of your expendable, not budgeted, money. If you don’t have any expendable money (i.e. if you are living paycheck to paycheck or cannot afford to build a savings account), then you need to wait until you have expendable income in order to start investing. Once you decide how much money you want to start with, you can investigate the different forms of investments.
Investing in Stocks
If you decide to invest in the stock market, you can either go it alone using a website like ameritrade.com or etrade.com, or you can hire a professional stockbroker to do the work for you. Either way, someone will need to decide what company or companies in which you will invest. Choosing your favorite companies may not be the smartest move. You should make the choice based on research which either you can do using the aforementioned websites or your stockbroker will do for you.
Investing in Mutual Funds
Mutual funds are a combination of different stocks. Investing in mutual funds means you aren’t investing in one specific company, but instead you are investing in several companies through the service of a mutual fund brokerage house. It gives you more opportunities to diversify your investments, but you have less association with one company and less risk. Of course, less risk means less opportunity to score big, but it also protects the money you already have. When choosing your mutual funds, you decide what level of risk you are willing to take.
Investing in Real Estate
Investing in real estate requires a lot more hands-on work than does investing in stocks and mutual funds. You can buy a piece of property and rent it out as an investment. You would be responsible for all the upkeep of the property and the mortgage. Although this is a viable option, it is also a lot of labor and might not be very rewarding for the first several years. Another option is investing in real estate investment groups. This is more like investing in stocks, where you are not the landlord. A property management company does the day-to-day managing and you just reap the benefits financially.