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New to Investing? What are the basics?

The richest man in Babylon a best-selling book told readers of the knowledge passed down the centuries to becoming wealthy, for a free copy sign up to our newsletter.

The book told us that ten percent of all you earn should be used to invest in things that make more money, and nothing works more ardently for money than money itself.

So you have a bit of cash saved how to make that work harder for you?

Deciding what to invest in is a constant challenge for even the most seasoned investor. Nobody really knows that the stock market will do tomorrow. However, an analysis of the last 20 years, 50 years and even 100 years shows that among stocks, bonds, gold, real estate, ICO’S and bank money markets, without a doubt the best place to invest has been the stock market.

Therefore if you are trying to decide what to invest in, if you have a time horizon of more than a few years, the best place to invest is the stock market.

Now that you have a good financial advisor, (if you don’t then contact us we can introduce you to well-regulated and experienced financial people) it’s time to decide what your risk factor is and what to invest in.

The best place to start is with some Exchange Traded Funds, or ETFs. ETFs are a way to buy a basket of stocks in a single transaction. One of the most popular ETFs is one that matches the S&P500 Index. It has a ticker symbol of SPY.

This is popular because a lot of people have the attitude of ‘if you can’t beat them, then join them.’ In other words, instead of trying to pick stocks that will outperform the stock market, just invest in stocks that match the market. The SPY is the probably the safest place to start when you are trying to decide what to invest in for the first time.

When you are ready to start choosing individual stocks, we suggest you subscribe to one of the top performing stock newsletters. The one that has performed best over the last decade has been the Motley Fool’s Stock Advisor which is up 300% compared to the SP’85%. This service is very well priced and is well worth it as you get up to a dozen picks each month.

We suggest signing up for their service, and reading their stock analysis. Even if you don’t buy all of their picks, it is a GREAT way to learn about researching stocks and what to look for when you are trying to decide what to invest in.

Having a good financial investor and keeping an eye on how things are developing should always stand you in good stead.

In the main you should;

Research ETFs

ETFs have become hugely popular over the recent years as a way for novice investors to begin investing. In addition to index ETFs that match the SP500 or the DOW Jones Industrial Average, there are ETFs specific to industries, countries, metals, oils, currencies, etc.

Choose Sectors

Select your stocks based on specific criteria (sector, industry etc.) Use a screener to further sort companies by dividend yield, market cap and other super useful metrics.

Stay Informed

Try to stay up-to-date. Read stock analysis articles. Read financial news releases. Stay critical. But try to remember the real money is in the long term but there is no harm in keeping an eye on things.

Types of Investments

Bonds

Bonds, or fixed-income securities, are debt investments in which an investor loans money to an entity, with interest. The borrower borrows the funds for either a fixed or variable period of time.

Mutual Funds

Mutual funds are operated by money managers and should match the investor’s objective. They are made up of a bunch of funds collected from many investors and the purpose is to invest in securities like stocks, bonds, etc.

Small-Cap Stocks

Small-cap investors are the risk takers. These small companies have huge potential for growth. However – because they are often under-recognized, more research is necessary. This requires the investor to have more time available to properly crunch numbers.

Large-Cap Stocks

Large-cap investors are more conservative – these guys like to play it safe. With their steady dividend payouts, these big-cap blue chip companies are as stable as they come.

Penny Stocks

Penny stocks are super high risk because of their lack of liquidity. Beginners are often lured in to these stocks because of their insanely low share price. This allows investors to hold thousands of shares for a relatively small amount of invested capital. With a scale like that, the gain of just a few cents per share can translate into major returns.

If you feel that all this is just too much for your noggin to handle, contact us and we can put you into a well-managed investment portfolio with good communication between the managers and the investor. People who can give you clear layman’s terms how these stocks work and how to help you get into the best investment vehicles.