Money comes to us in all kinds of ways. And for many of us just keeping it around long enough can be a real challenge. But, assuming you have some to spare, one of the very best things you can do for your money is to help it grow. And that’s the point of investing your money.
But first it helps to understand your investment options, so you can figure out which ones are best for you. And which ones offer you the level of risk and return that feel most comfortable. Investing your money isn’t as hard as it may seem, but it does take a bit of self-education and patience.
Basically, the main point of investing your money is to get it to grow faster than inflation. But you also want to protect your principal (original amount) as best you can. And that’s where things like diversification and risk management enter the picture.
Investing your money in stocks
Most people think of stocks when they think of investing. So let’s start by getting a solid understanding of some of the basics of stocks.
Learning about bonds
For serious investors, bonds can help provide a good balance. They allow you to strengthen your portfolio by spreading the risk and not having just one type of investment.
In other words, it’s about not putting all your investment eggs in one financial basket. So your portfolio can get through some of the scarier market times with less of the roller coaster effect. (See portfolio theory article below for more information on that.)
Dividends and interest rates
We all want to grow our money. But exactly how does your money grow? Of course, there is market growth, as we watch stocks climb.
But we also need to look at things like dividends and interest rates. The nice thing is that these can continue to pay no matter what else is happening in the financial markets.
Important investment basics
As I mentioned earlier, smart investing comes with self-education. Luckily, you don’t need to know every single detail of how financial markets work to grow your money.
But there are some things that can help you make wiser decisions. So here are some articles that offer investment basics to help strengthen your financial literacy foundation:
Over the years, most of us we put money into retirement accounts. Or at least we try to. And then, when we finally reach our retirement years, there are even more things to think about. Some articles to help (more to come):