You've finally reached the point where you have a few dollars set aside to invest. You realize that in order to make money, you either have to earn it by working, or derive it from an investment. You also realize that all investments require some form of initial capital. What next?
Investment theory
Investment for beginners merits a certain fundamental question. What constitutes an investment? An investment is anything that you purchase speculatively in the hopes that the value will increase. It's the age old buy low sell high adage, and whether the investment is a home, stock, bond, vehicle, or other valuable object, the goal of the investment is to generate return for the investor. Some investments, like bonds for example, are a vehicle by which you put down a certain amount of money to buy them (called the initial capital). The investment then grows in value - or at least it's supposed to - which is called appreciation. Something like a bond will generate interest, called dividends. Some investments can generate both dividends and profits when they are sold. To use the bond example, it generates interest while you hold it, for as long as you hold it, but you can sell it at any time for profit. Other investments, like homes, will only generate a profit when sold.
Investment risks
Most investments carry risks, from remote, to very real - and you should be aware of these risks. Even something like a bond or Treasury bill represents a minute risk. Could a government default on these obligations? It seems unthinkable, but within the last several years, it is a possibility. Bigger items like homes are also not immune to risks. Stocks are also filled with risk that needs to be accounted for in your investment strategy, and are potentially a bad investment for beginners.
How much to invest and when?
Investment is not something to consider when you're behind on your bills or don't have an adequate savings. The first rule of investment is to invest with income that you can afford to lose, which is why you need to be current on your obligations and have a comfortable savings in the bank before you begin investing. Investing for beginners means you allow yourself to spend only a designated percentage of your portfolio, say 10% to start out with. Of that 10%, you need to consider what percentage you want to be risky investments versus what percentage you want to be stable, but low yield investment.
Investment is not simply for Wall Street tycoons, it's for everyone, including investment for beginners. Investment is really the only way to leverage your income into working for you so that you don't have to work as much, or as hard - and the best time to invest is in your youth as you enter the workforce, which is a time when most people have no debts and lots of disposable income to fuel their investments with. Be prudent, patient, and careful, and you'll be rewarded with years of profits.
Investment theory
Investment for beginners merits a certain fundamental question. What constitutes an investment? An investment is anything that you purchase speculatively in the hopes that the value will increase. It's the age old buy low sell high adage, and whether the investment is a home, stock, bond, vehicle, or other valuable object, the goal of the investment is to generate return for the investor. Some investments, like bonds for example, are a vehicle by which you put down a certain amount of money to buy them (called the initial capital). The investment then grows in value - or at least it's supposed to - which is called appreciation. Something like a bond will generate interest, called dividends. Some investments can generate both dividends and profits when they are sold. To use the bond example, it generates interest while you hold it, for as long as you hold it, but you can sell it at any time for profit. Other investments, like homes, will only generate a profit when sold.
Investment risks
Most investments carry risks, from remote, to very real - and you should be aware of these risks. Even something like a bond or Treasury bill represents a minute risk. Could a government default on these obligations? It seems unthinkable, but within the last several years, it is a possibility. Bigger items like homes are also not immune to risks. Stocks are also filled with risk that needs to be accounted for in your investment strategy, and are potentially a bad investment for beginners.
How much to invest and when?
Investment is not something to consider when you're behind on your bills or don't have an adequate savings. The first rule of investment is to invest with income that you can afford to lose, which is why you need to be current on your obligations and have a comfortable savings in the bank before you begin investing. Investing for beginners means you allow yourself to spend only a designated percentage of your portfolio, say 10% to start out with. Of that 10%, you need to consider what percentage you want to be risky investments versus what percentage you want to be stable, but low yield investment.
Investment is not simply for Wall Street tycoons, it's for everyone, including investment for beginners. Investment is really the only way to leverage your income into working for you so that you don't have to work as much, or as hard - and the best time to invest is in your youth as you enter the workforce, which is a time when most people have no debts and lots of disposable income to fuel their investments with. Be prudent, patient, and careful, and you'll be rewarded with years of profits.
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