How to Start Investing? Top 7 investment options


Most of those who are new to investing, can often become confused with huge amount of investment options and strategies that are available. While the majority of new and even intermediate investors will try to seek for the best investments, they could be missing the most important thing. It is investor education.

No matter how well perform your investment, it is still a gamble if you do not understand the reasons why selected investment performs in such manner.

The other important point is that you should learn how and where to invest only from those, who already made a fortune, not from those who only teaching how to achieve it, while still living solely on salary themselves.

Let’s look at some of the investment options and opportunities newbie investor can use and explore how to start investing with them. Those investment options are considered to be the safest.

1. Retirement Investment – Investing Money in 401K

One of the most important investments people will make is for their retirement. It is crucial to start thinking about retirement investment long before you actually retire.

Making sure you have enough money for retirement is one of the most important investment decisions you can make.  Yet, you can invest for retirement without any knowledge of stocks and bonds.   One of the first things to do is to amp up your 401K.  Put as much as you can into your 401K plan, especially if your employer offers matching funds.   Many employers will match up to 50% of what you invest.  Failure to take advantage of this is essentially walking away from free money!  Make a retirement savings plan and stick to it tenaciously, holding on through market storms and recessions.  Also, never “cash out” of your retirement when you switch from one job to the next.

When it comes to retirement saving and investing for beginners, the key is to start NOW.  With the realities of compound interest, it is possible for a person who invests one-half of what you do to retire with twice as much—all because s/he started early.  Time is money, and the longer you invest and save for your retirement, the better.  You simply must start right now.

2. Bank Savings Account

There are smaller, more simple ways to start earning money for the ones who just starts to uncover how to start investing, without taking large risks in the stock market. One of the easiest investment strategies is to open a simple bank savings account, that holds little risk. Savings accounts are liquid and require minimum balance. This minimum balance depends on bank, sometimes it can be as low as 1$-5$, but in most cases around 100$. Savings account liquidity means, that you can take out your money whenever you want.

You must understand that different banks can pay different yearly dividends. Yearly interest rate of the bank can depend on many factors such as its capital, location and currency of deposit. So if, for example, your local bank offers you a 4% yield in US dollars, do not hurry to put your money. Instead look what other banks can offer you. Do not look only for deposits in US dollars, but pay attention to deposits in other currencies such as Swiss franc or Canadian dollar. Deposits in other currencies sometimes can offer you a higher interest. By making this research you can find great investment opportunities which banks can offer.

3. Certificates of Deposit

Another easy option that bank offers is a purchase of Certificates of Deposit, or CDs. Certificates of deposits are akin to savings accounts for the savvy, they are timed deposits that collect interest for a certain amount of time. The time period could be as short as 3 months or as long as several years. Typically CDs have higher interest earnings than regular savings account and are a great transition into others forms of monetary investments. So it can be a good choice of how to start investing. Certificates of Deposit are also considered as low risk investments, because CDs are usually insured by government.

Businessman Passing Baton to Businessman

4. Real Estate

One vehicle of investment that is largely ignored by investing beginners is real estate investing. No matter the specific real estate market, people will always need a place to work and live. Purchasing different types of real estate, such as apartment homes, small rental homes, and office complexes, is a good way to get a return on investment each month. Beginning by owning a small duplex or small multi family unit may be a good idea, as smaller units are easier to maintain as a landlord, and less tenants equals less responsibility for a new landlord. Monthly rent on real estate investments should be set at more than the monthly mortgage and insurance costs in order to make a profit monthly. Real estate investors should always purchase property they can properly fit in their own budget, as finding renters or purchasers for the property may take several months depending on the market.

5. Treasury Bonds

Treasury bonds is another good asset for investing beginners to get, basically it is a loan to your government. Treasury bonds are also considered as safe investments, because they  are backed by government. However when considering buying treasury bonds, look at their credit rating. Those ratings are issued by credit rating agencies like Moody’s, S&P, Fitch. Grades will vary by agency, though AAA is the highest grade ( meaning that bonds are very safe) and D is the lowest ( actually when government has default). Treasury bonds can be bought through the Treasury Department. You can also check with your bank or your local broker and see if you can get them there. You can buy bonds for as low as $100. Treasury bonds have maturity of 10 years or more. Many people buy them for their children, and have them mature in 10-20 years for college costs.

6. Precious Metals

Another strategy of investing for beginners is to buy gold and silver.  Gold is inviting because it holds its value more than other currencies: it is the only money in the world that has never failed. Converting some of your money to gold has the advantage of being valuable even if the dollar takes a nosedive in value.  When the economy falters, more people buy gold, which helps the individual investor to counter rampant inflation.

There are several ways to invest in gold: coins and bars being very popular.  Investors can store the gold at home if they wish (one cynic said that the government can’t steal something from you if it can’t find it). If you are not comfortable enough to store the gold at your home, there are companies that will hold it for you.  However, many experts advise against this option, saying “always take delivery.”

Gold will always be good currency even in another depression—in fact, the Great Depression of the 1930s teaches the value of gold: remember those pictures of people pushing wheelbarrows full of valueless dollars to get food?  In such a crisis, having some of your money in gold is a great way to protect your wealth.  Many experts are, in fact, predicting a great economic downturn, and buying gold NOW can help you to protect your assets.  These experts say that, if possible, you should buy some gold every month. Buying gold at the right time will not only protect your wealth, but it can also make huge profits.

Silver is second only to oil as the most useful commodity.  Silver has the advantages of being less expensive than gold, but it has much greater practical value with respect to other investments.  In case of catastrophe for the dollar, silver is easier to divide than gold.  As with gold, silver is a good way to prepare for economic downturn and inflation.  Most experts recommend having a mix of silver and gold.  The gold will be for larger amounts of money, such as hundred-dollar bills, while silver would be for lesser amounts, such as twenty-dollar bills.  Another thing going for silver is that it is much-used, which keeps its value up.

7. Invest in What You Know

Peter Lynch and Warren Buffet advise people to invest in what they know, saying that this is more important than technical knowledge of stock and bond analysis, which you can learn fairly quickly and easily.  According to their theories of investing for beginners, even if you have knowledge of stocks and bonds and the way they work, if you are dealing with something that has a lot of unknowns for you, you will be more susceptible to scams.  But, if you only invest in what you know, you will be more likely to hold on to your money.  Not only that, but people following this investment strategy are likely to derive more enjoyment from their investments.

Buffet was famous for following his own advice: during the “dot.com” explosion, he did not enter the fray, even though it was terribly profitable for a while.  He refrained because he was not comfortable with investing in technology.  According to Lynch and Buffet, if you want to invest outside of your “comfort zone,” you should seek expert help. Clearly, investing in what you know is a good investment strategy: it works for Lynch and Buffet, and it is difficult to argue with success.

These are stable investment tools. If you want to invest, but don’t know or unsure how to start investing, try to stick with before mentioned options.

Like this page? Save it, or Share it with the world! ----> Bookmark and Share

A Closer Look at Investing in Physical Gold and Gold Coins


Investments in gold can take two forms. Physical investment, which is basically purchasing gold in bars, biscuits, coins, or jewelry, or paper investing. Let’s take a closer look at the pros and cons of investing in physical gold, and which forms are the most beneficial to purchase.

Physical gold is gold that you can hold, touch, wear, or even spend. The main concerns when acquiring gold in physical form are what forms to buy it in, and where and how to store it. The physical forms, as previously mentioned, are coins, bars, biscuits, and jewelry. What is the value of investing in physical gold? No matter what happens to your countries, or the world’s, money, gold can always be spent due to it’s intrinsic value, and it’s accepted everywhere around the world. Gold also has huge aesthetic value. Simply put, it’s beautiful. It’s also portable; it’s small, and can be made in to just about any form, such as coins or bars. You are also protected against bank failures. It is generally agreed the best way to invest in physical gold is to purchase gold bullion either as bars or coins.

Gold bars are sometimes recommended because they have lower premiums than gold coins. On the other hand, some recommend gold coins because, while they carry a higher premium, they are easier to sell or resell. Production costs on gold bullion are fixed, and since these costs are factored in to the price of gold, that explains why, at times, premiums may be higher on smaller coins than on larger ones, or on gold bars. Yet surprisingly, they can often be bought for a lower premium, even weight for weight. What is meant by premium? The percentage amount over the value of gold that is traded. A low premium on gold coins doesn’t change the value of the gold in the coins itself. Premiums rise when the demand for gold coins increases. The same gold coin may cost more in one country than another if the demand in that country is higher. This is known as a premium differential and can be a good way to evaluate the worth of investing in gold coins.

Gold Coins

If you are going to invest in physical gold, it is probably best to buy gold coins for several reasons in addition to their resell value. Prices for gold coins are better because they can be competitively priced due to efficient mass production. Collectors may also buy coins if you wish to resell them. It is much easier to sell one hundred thousand dollars worth of gold coins than to try to liquidate one bar of gold worth the same amount. In the case of coins, you can sell as few or as many as you wish, without dealing with all the refining or handling fees that may be incurred with gold bars. Gold coins are more portable, and easier to store at home than heavy bars of gold.

For those who are new to investing, or a small investor, gold coins are a good choice because you can accumulate them in smaller increments. One suggestion, though. You may see gold minted coins advertised for collectors or investors. Check the current spot price of gold which can easily be found online at several places that deal with gold investments. If the premium for the minted gold coins is over ten percent difference of the spot price, it’s not a good deal. Very old or rare coins can be difficult, but not impossible, to verify.

Once you’ve bought your gold, then what? If you are keeping it at home, you need a safe to store it in. A vault is another safe place for gold storage, and it also has the added benefit of protecting the integrity and value of your gold. There are no costs for transporting it because it stays put.

When buying physical gold as security against inflation, poor economy, and protection against currency devaluation, or for what ever reasons you decide you want to own and invest in owning gold, it’s important to keep a few things in mind when purchasing physical gold.

 

1. Know your seller. If you buy online, buy through a reputable dealer. There are websites that can direct you to good online sites for purchasing physical gold. For those who buy gold locally, again, know your seller.

2. Don’t pay more than 8 percent premium over the spot price – otherwise, you are paying too much.

3. Buy whole coins rather than fractional coins for the best value. The mark-up is higher.

4. Gold is a soft metal – keep it in it’s container and in a safe place with minimal handling so it won’t get dented in any way.

5. If using a bank vault or safe for storing your gold, insure it. Theft can and does occur.

6. Beware of third party storage services. If you are purchasing a large amount of physical gold, or in forms such as bars and are afraid to keep them in case of theft or even forgetting where you’ve placed them, go with a trusted, reputable service. Do your research.

7. Enjoy! You own gold and it’s beautiful. It’s got intrinsic value based on that alone!

If you want to buy gold or silver, just go to GoldSilver.com or Goldmoney.com.

Like this page? Save it, or Share it with the world! ----> Bookmark and Share

Ways to Invest in Gold and Other Precious Metals


If you are one who pays attention, however briefly, to what you see, hear, and read, then you might be aware that gold investing is a big topic these days.
Turn on a talk radio program and often, there’s a series or informational on the subject. Internet ads urge people to buy gold now and protect yourself against a worsening economy and worldwide economic crises. Gold can protect against rising inflation in the country and in the world.

It’s wise to keep in mind, though, that a stable economy can limit your return on investments in gold and other precious metals. With that kept in perspective, what are some ways that one can invest in gold, and which ways might prove to be most profitable for the investor, whether new to the market or not? Before beginning to look at various ways to invest in gold and other precious metals, try to remember the golden rule of investing. This is the one pertaining to not putting all your eggs in one basket. Diversity is the key to successful investments of any form, and the same goes for gold investments. Whatever your investments, a certain percentage invested in gold is a good idea, if only because it adds diversity among your investments. And although it’s possible to have gold as your only investment, this is usually not recommended. Spreading your investments around offers better financial protection in the long run. Once you have decided to invest a share of your money in gold, how is this done? What are some various ways to invest in gold and/or other precious metals?

One method is to purchase gold itself – in coins, bars, biscuits, jewelry or any physical form made of gold. It’s real, it’s tangible, it’s gold. If you purchase physical gold for investment purposes you will need somewhere to store it, such as a safe at home or a safety deposit box. There are pros and cons of each form of physical gold purchased, and some further research can help you decide whether to invest in gold jewelry, coins, bars or biscuits. A gold biscuit is basically a gold bar, only one made from “stamping” a rolled gold sheet. This is thinner than a bar made from pouring gold in to a mold, which is known as a “cast” bar. Dealers often tend to refer to both types as bars. Physical silver can also be purchased as jewelry, bars, or coins.

gold bars

Another method of purchasing gold and some other precious metals is the paper method. Paper investment can be accomplished through mining stocks, also known as equity, ETF’s , or Exchange Traded Funds, and, recommended only for the very experienced investor, futures contracts or futures markets. E-gold or silver, or digital gold/silver currency, is another investment option.

For precious metals outside of gold or silver, the paper method is normally the best way to invest. While platinum can be physically purchased, in coins, it is harder to cash in that way. Palladium can also be used in jewelry and coins, but is about half the value of gold. Two platinum metals, iridium and osmium, are not usually used as investments. Likewise, investments in rhodium and ruthenium are not investment type metals, either. All of the platinum group metals are rare, and for those who do invest in them, one must buy in very large lots to get a good price. There are no real futures markets with these metals.

For those interested in investing in gold, silver, or other precious metals, research in to the various investment methods is recommended, especially for those who wish to get the best return for their investments. There are some who feel investment in physical metals is less risky than paper investments in the same metals, and others who believe just the opposite. Much depends on factors such as rarity, demand, and the overall market.

If you want to buy gold or silver, GoldSilver.com and Goldmoney.com are safe places to do that.

 

Like this page? Save it, or Share it with the world! ----> Bookmark and Share

The Do’s and Don’ts of Investing in the Stock Market


The stock market has taken a pretty heavy hit the past few years, especially during recent recession times. For those with some money to invest, especially those new to investing, the stock market used to be a natural choice. Today many new investors are leery, especially when faced with news about the “Dow dropping…” so many percentage points.

Does this mean it’s a bad thing to invest in the stock market? Investing in stocks can still offer a good return on your investments, but it’s important to be aware of a few things. First and foremost is the fact that the stock market has it’s ups and downs. It’s not considered a game, but rather a business by those involved. It’s also a competitive business, and to investors, it can feel like gambling at times. You are taking a chance that the money you invest will make money for you. Sometimes you lose money, just like with gambling. If you play that hand of cards well, and have some ideas on how to go about beating the odds, you come out a winner. So, what are some things you might want to know before taking a gamble and investing in the stock market?

Stock market investments are owner investments, not loaner investments, such as money in a bank savings account. In that case you are loaning your money to the bank so it can make money from your money, while paying you a small dividend (interest) based on amount and length of time your money is on loan to the bank. With the stock market you are investing in equity, not debt. You are owning part of the company, sharing ownership with others who also own stock in the business. When the value of the company changes, your share’s value changes. A business is financed through the money collected from investors, making the investors part owners, and the ownership is represented by the stock. Because it is riskier, it will generally pay more.

World profits

Keep in mind the old adage about not putting all your eggs in one basket. Go for several different stocks, and if you can’t afford more than one or two at the most, try owning a “slice” filled with a variety of companies by investing in a mutual fund. And rather than investing all your money in one swoop, keep a bit aside and add in small amounts each month. Should the market fall you can then buy at lower prices.

Any money you might need in five or even ten years down the line should not be invested in the stock market. Your risk is much lower when money spends a longer time in stocks. This goes in hand with how much money one should invest in stocks. One financial expert advises subtracting your age from one hundred, and that is the amount to invest in stocks. Which means the older you are, the less you’ll invest in the stock market, the more you’ll put into a loaner investment such as the bank. You don’t want to be so over-invested when you are older that if the stock market takes a hit you’ll feel forced out of retirement. Stocks are generally considered long term investments. If you are young, this can be to your advantage. You can survive dips in the market, and possibly be well rewarded with the long term gains. Later in life those stocks can be turned in to bonds for some retirement money.

Which type of shareholder in a company is best? With the two types of shares in a company – common shares and preferred shares – if a company goes bankrupt, both types of stockholders end up behind creditors when it comes to getting any money back. Yet a preferred shareholder has a higher ranking, and stands a better chance of getting part of his or her investment back if a company goes under. Higher dividends, and a say in company decisions, are two additional benefits of a preferred shareholder.

Remember, there are no guarantees with stock market investment. With the inherent risks involved, make sure you deal only with registered stock brokers. Beware of rumors and tips and “guaranteed” returns. There is no real guarantee in the stock market, but with some wisdom, and careful investing, you can make a nice profit down the road.

Like this page? Save it, or Share it with the world! ----> Bookmark and Share

Fundamental Principals of Investing


Making an investment because one of your friends has advocated it to you or deciding to invest after encountering some lucrative investment offer by yourself can become a critical mistake. It is not the road to wealth, but the road to failure.

 

Why is that and why amateur investors often do fall into that trap? This happens because beginner investors  often consider investing to be a pretty simple and straightforward process and as a result they neglect the basics of investing.

Before making any investment, you should learn and understand fundamental investing principals. Those fundamentals will help you to protect your money and increase your profits.

1. Diversification

This is probably one of the most important points you have to look at, when you consider how to start investing. Despite how appealing can be the asset you want to invest in, do not invest all the money you have into just one asset. This should be done for safety of your money. Instead you will be doing much better if you select few assets and diversify your money between them.

2. Holding cash

While making other investments it is important to always have some cash available. Why it is important to always hold some amount of cash? Because of market constant volatility and fluctuations there is a good chance, that an opportunity will suddenly rise. And that is where value investing comes in. Imagine that you discover, that stock price of a company, which has a good business model and fundamentals is far below the value it should be. It means that company’s stocks are undervalued and therefore will rise in future. With that in mind you need to act fast and buy those stocks, while they are still cheap. And cash you have successfully saved will help you to do that.

710597_85581884

3. Research

Before making any investment despite how safe it is – you will do much better if you make research first. Why it is important and how to start investing based on a research? Let’s have a look at an example.

For instance you have decided to put some of your money into a bank savings account, while this investment is safe by its nature, if the bank you want to invest is bankrupt, it won’t be a safe investment anymore. Or you want to invest into a stock market and see in a performance chart of the stock you want to buy, that it is undervalued and it is best time to buy it, while in reality it is not undervalued, it is the company you want to invest is on its way to bankruptcy. Always pay attention to others sources of information, not to the media, because when information is being widespread by the media – it could be too late.

4. Consider Fees

To calculate your future profits more precisely and decide whether investment is worth it or not, you should take into account fees. Despite which investment you will choose there always be fees out there. You may ask what fees? Well, when buying or selling stock – you pay some percentage to broker, bank also has maintenance fees etc.

5.Taxes

Taxes always was a complicated issue. Taxation laws are different in each country, but it is very important to find out these laws, before you start any investment. Ideally you want to make investment planning with tax advisor. It will be hard to find out all the nuances without tax advisor. But when you just begin to learn how to start investing or can’t afford tax advisor service, it will be enough to find out what tax is implemented for investments in your country.

Like this page? Save it, or Share it with the world! ----> Bookmark and Share

Tax Tips

While it is important to know which investment options are available at the moment, it is also important to cover tax tips for different types of investment.

1. Bonds

Bonds are issued by many authorities and institutions. Depending on bond type and other conditions it can be fully taxable or tax free.

Corporate bonds (bonds issued by a corporation) are fully taxable. These bonds pay highest interest rate though.

Municipal bonds are tax free at all levels only if investor resides in the same state as the bond issuer.
However if investor resides in another state, then his interest is taxable on his state income tax, but not on federal tax.

Government bonds are subject only to federal taxes, but not to local state taxes.

Tip to reduce bond taxes: Even though government bonds are not taxable it doesn’t mean that those bonds are the best choice, because their interest rate is usually lower than other bond types can offer. When selecting which bond to buy you should calculate and compare expected yearly profit of government bonds and expected yearly profit of other bonds ( in this case don’t forget to subtract taxes in order to see pure profit). Thus you will be able to make the right decision.

2. Precious Metals

Precious metals are taxed in the majority of countries. Tax usually does apply when precious metals are being sold at a profit. However taxes on precious metals vary by state or country. It also can vary depending on what type of precious metal you hold and want to sell.

Tip to reduce precious metal taxes: Look for countries (or state) with lowest precious metal taxes to sell your holdings.

3. Certificates of Deposit

Interest earned with certificate of deposit is also taxable. It is a subject to taxes on a federal level. However taxes must be paid only when interest is accrued into your bank account.

Tip to reduce taxes on certificates of deposit: Do not withdraw your money before certificate of deposit matures, because then you will have to pay penalty for early withdrawal ( it is usually around 10%, leaving you with negative profits in most cases).

4. Mutual Funds

Mutual fund taxes is a bit more complex subject, because it includes taxes on interest and taxes on capital gains. Both types of taxes are subject to taxes on a federal level and in most cases on a state level.

Tip to reduce precious metal taxes: Mutual funds with high turnover are subject to higher taxes and therefore it will cut your gains. So instead of looking for mutual funds with yearly turnover of 100% or more look for mutual funds that that have yearly turnover of 20% or less ( for example index funds).

You must remember that tax rates are constantly changing and new tax laws are being constantly introduced. As a conclusion it would be better to contact your local tax advisor for more actual and precise information on taxation as well as for advanced options on how you can legally reduce your taxes.

Like this page? Save it, or Share it with the world! ----> Bookmark and Share