Investing your money is one of the best ways to put your money to work for you. Today, we’re going over some of the basics of investing and what you need to know to get started growing your finances.
If you’ve ever considered investing money in the stock market but stopped because you were worried about not being able to understand it, this guide is for you.
Investing is the process of laying out money into an investment vehicle, like a stock or bond. The hope is that your investment pans out well for you and grows your money. For example, picture a person in 1999 putting an investment into stocks of Google.
After a few years, that investment would have grown substantially, and that person would be quite wealthy in the modern era.
There are several types of investment you can put your money into. There are stocks, which are shares of a publicly-traded company that you can buy and sell. There are bonds, which are a type of loan you issue to a company or government.
There are also various types of investment funds, like exchange-traded funds, mutual funds, and index funds. The bottom line is, investing in any of these could result in your investment growing.
All of these types of investments are available to be purchased and traded through common online brokerages. In the modern era, few people have an actual human stockbroker making their trades and purchases for them. Instead, the average investor uses an online brokerage to keep up with their investments.
When you begin investing, ask yourself a few questions. How much are you willing to invest? How much mental effort are you willing to expend on your investments? Some investors want to set aside a sizable portion of their finances and invest it actively. They want to keep active track of their money as it grows, and reinvest it when they see new opportunities to grow their funds.
Other investors want to “set it and forget it,” using only a few dollars out of their paycheck to fill a slow-growing, safe investment fund. Experts advise the best investors to be a bit of both.
Younger people should focus on safer investments that have slow growth, so their finances gradually expand. Older people should be more aggressive, making the most use of their time by investing in high risk, high reward prospects like publicly traded stocks.