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Investing for Beginner
Investing for Beginner: Decisions to Make
You need to begin your in beginner investing by performing an assessment
of your personal finances. If you wish to invest in stocks, bonds,
mutual funds or even real estate, you need capital to invest. Construct
a net worth statement which will list your assets (cash, private
property, savings,etc) as well as your debts (loans, credit cards,
mortgage,etc). Look closely at your debt position and determine
if you can afford to invest now. It is much better to pay off high
interest debt (12% or higher) that it is to invest the same money
and earn 10% per year. If you need help with this net worth statement,
simply go to Microsofts' site and download a free evaluation copy
of Money. It explains step by step how to create this statement.
Now for the next step in Investing for Beginners...
Investing for a Beginner:Risk Levels
This step requires you to determine the level of risk you want to
take with your investments as well as the percentage of return (earnings
or interest) you desire. This is critical to making smart decisions
when you are investing as a beginner. Are you a high or low risk
beginner in investing? Would you be satisfied with 8% per year or
do you want 25% or more? No one else can make that decision but
you. Higher risk involves equities(stocks), and if you want minimal
risk, look at government backed Treasury Bills.
Investing for Beginner: How much can you afford to invest?
Any beginner in investing needs a regular savings and investment
plan as the key to their success. Get in the habit of saving a certain
percentage of every paycheck, and write out an investment check
just like you would in paying a bill. Consider this amount in your
monthly budget as a beginner in investing. Speaking of budgets,
Money will also let you create a budget that will show you how to
plan your monthly investments and income. Learn to live within your
means. Some of the wealthiest men in the world learned this lesson
early in life. They are happy to drive a car that is ten years old
and live in a house that is modest, yet fully paid for. They live
well below their means and would readily admit it was one of the
keys to acquiring wealth and being able to enjoy other things in
life (travel, giving to others, etc.)
Investing for Beginner: Terms You Need To Learn
Stocks
When you purchase stock in a company, you become part owner of the
company and share in its profits. The more shares you buy, the more
ownership you have (usually your ownership will be a small fraction
of the company). If you have $1,000 to invest and invest it in a
compnay that has stock selling for $20/share. You then own 50 shares.
If the company's share price raises to $30 per share, you will then
have $1,500 in stock value and wil have made a 50% return on your
investment. Stocks can be categorized in many different ways, such
as common stock, preferred stock, penny stock, small cap, medium
cap and many others. We covered this issue in one of our previous
newsletters.
More Terms Click Here>>
Investing Newsletter
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