Thursday, December 10, 2009

Investing

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I started this site because I was interested in investing. Back in 1985, I started working for a bank and that's when I got interested in trying to make money in the stock market. Because I have a long history in the financial services field, a lot of the concepts about stocks, bonds, mutual funds and options are familiar to me. But, I know that a lot of people need more information and need a good resource on stock market investing to do it. That's what this site is about.

My definition of investing is this: You give your money to another individual or company who puts it to work implementing their idea or growing their business. In return, you get your capital back plus earnings in the form of dividend or in capital gains. I think the primary reason to invest, is to build a nest egg for retirement. Retirement investing is a hot topic but particularly with people who are nearing retirement. They want to know if they are doing the right thing. Will they have enough? That's why it is critical that you start implementing an investment strategy as soon in life as you can. Compounding of interest and gains can help your savings and investment funds grow faster because the earnings is earning money -- not just your original principal amount. The magic of compounding is a key factor in your results.

Stock market investing provides one of the most lucrative options to put your money into because of it's long track record. It has a history of providing an average return higher than bonds and money market fund. That being said, just because you put your money into the stock market, doesn't mean you are guaranteed to make money. If you choose poorly, you will more often than not lose money. Therefore, it's incumbent on you to learn how the market works through study and practice.

If you have a lot of money, though, you could pay for investment management services to have someone handle your investments. I think that while this strategy can work, for the most part, the advice you get probably won't outperform what you could learn to do on your own and I strongly urge you to consider it. Why? Because I think it's been proven over and over that Wall Street doesn't have your best interest at heart. And many people, including people I know lost nearly half of their portfolios in 2008. Where were these advisors and why weren't they encouraging them to lock in any gains? Not earning their paycheck -- that's where.

If you decide to do it on your own, you'll need to become familiar with investment securities, the market, how to make trades, how to do stock market research. These are things that you can learn through reading and study and the help of most of your online brokers who provide webinars sometimes free, that can help you. You'll also need a source of stock market information for daily advice and a data you need to make decisions about the stock market today.

You can if you want also seek out your friends for investment advice as you may find a mentor who is already practiced at the fine are of investing. If so, spend time with them. I know personally, that one of my family members is into property investment and he has proven a strong resource with some rental property I have. The key is the resources are there if you look. I would, however, encourage you to stay leary of the media and the brokerage houses in general because I think they have their own interest at heart, not yours and mine.

Because of the sheer number of investment opportunities available to us, the first thing you are going to do is select an investment philosophy. I'd encourage you to start researching that first to get a feel for the type of investor you want to be.

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