The world’s economy fluctuates in more drastic and unpredictable ways than ever before, and costs are rising. Many people are waking up to the fact that a single income stream is no longer sufficient to maintain their aspirations of upward mobility, or their current standard of living. When faced with this reality, an unattractive dilemma presents itself; take on a second job and earn the extra money that today’s economic climate demands, but sacrifice valuable personal time for ourselves, or with friends and family.
Companies like CMC Markets provide multiple tiers of investment platforms. Schedule a meeting with your FI today and get started investing money the right way.
If you have worked hard (or still are) laying down wealth, but find yourself in an untenable economic position, there is an option that can keep your net worth rising, while allowing you to be in one place at one time.
Stockbroking is not gambling, as it is sometimes portrayed. Investing is in fact a cold, hard science that demands patience and planning.
Putting your own money to work for you by investing it in the publicly traded shares of a company and choosing how best to do that requires doing some homework. First, you need to choose an investment vehicle. Will you put your money into stocks? Into bonds? Maybe mutual funds are more your thing. You could even start your own business…
Don’t get overwhelmed. Yes, there are a lot of options to choose from, but the most important thing to remember is to keep your money working for you, earning profits.
Stocks are legally purchased shares in publicly traded companies. The purchase of stock makes the investor a part of the business, and gives that person a stake in the company’s potential success.
Simply put, stocks yield dividends for investors. Dividends are the portion of a company’s profits it allocates to its pool of owners (investors/shareholders).
Stocks are the highest returning investment vehicle, but they come with costs – risk and volatility. As the fortunes of companies rise and fall, investors in stock must be willing to assume the risk associated with being tied to a company’s fortunes.
Bonds are fixed income investments. When you buy a bond, you are lending your money out to a company, or in some cases a government. You will receive regular interest payments throughout the course of the bond’s life, until such time as it matures and your full investment is returned to you.
Bonds expose their owners to very little risk, as long as they are purchased from stable entities. The downside of this security is that there tends to be a very small, very slow rate of return. This can be offset by the size of your initial investment, but unless you have a sizable amount to invest these may not be for you.
Think of mutual funds as group investing, done with combinations of both stocks and bonds. Mutuals are designed to have specific goals in mind. It could be large or small stocks, government bonds, company bonds, equities in specific industries, or even entire domestic economies.
Because mutual funds are professionally managed, it frees investors from the time and expense of managing their own portfolios and places their monies in the hands of someone with the insight and experience to invest it wisely.
Alternative Investment Vehicles
Often found under the blanket term ‘speculative investments’, alternative investment vehicles are the domain of experienced investors only, as they require a degree of expertise that can take years to gain. These are “high risk/high reward” investments, meaning errors in speculation could cost you a lot.
How to Get Started Today
There are a multitude of self service or guided investment platforms that can be purchased from your financial institution, or from other financial services companies. Brokerage fees will vary from institution to institution, but most will feature platforms that provide their clients with access to information about the shape of the market, the sectors their investments cover, and often news and analysis of and about specific companies. These value added features can make a real difference to a newer investor’s chances of success.
Featured image courtesy of FreeDigitalPhotos.net