Investing Advice

The Basic Steps in Investing

Investing Advice should start with the most logical comment, which is that if you're thinking about investing, there are a number of things you really do need to consider in order to create the most effective game plan - a sort of plan of investing progress!

Some of the things to consider are questions such as - why are you investing? - Is there a specific goal to this investment or just a general aim? - how long do you have to invest in order to reach your goals? - can you maintain your intended investing commitments with your current and expected future incomes?

Now, when time is a concern or a limiting factor in some way, there are 3 kinds of investments you can sensibly consider:

 

1  Bonds – A form of money lending, bonds are money lent to companies or municipalities or the federal government paid back to you with interest. You can usually do this for between 3 and 10 years with an average return of around 5% per year.

2  Stocks – Stocks actually give you a portion of company ownership. Generally, if you want to invest for 10 or more years this is the way to go; it gives a return of around 10% interest in a year.

3  Money Market Instruments – An investment for the short term, usually a year or two, average returns are around 2-3% interest. This is money lending to banks and other organizations that use the money and pay back a set return on it.

The second aspect you really should review is then - what is your actual approach going to be? Consider the following two methods that you can use to invest - either conservative or aggressive.

Conservative – otherwise known in investing circles as the 'buy and hold' style of investing. The people who choose this type of investing don’t want to be involved actively, but just want to see a modest return on their investment over time. Very secure and stable, just without the possibility of massive returns. A prime means of conservative investing would be through a low risk mutual fund investing.
 

Aggressive – as we're talking styles of investing, this would definitely be called the 'buy and sell' style of investing. With this approach you are buying and selling regularly when you need to so you can get the best deal and sell for the highest possible price. This is also much riskier, but can be ultimately much more rewarding. The more experienced and active investors partake in this type of trading.

When deciding on whether or not to use a buy and hold strategy or an active buy and sell strategy you will have to consider many things. The main things being your time and your stress levels in life, these factors will decide which investment plan is best for you.

If you are someone who would rather not have any stress and get a little less of a return for having long term secure investments you will want a buy and hold strategy.

If you are someone who takes on risk and is willing to work incredibly hard to get higher earnings then the buy and sell strategy is for you.

Deciding on whether or not to use the buy and hold strategy or be an active buyer and seller is difficult to consider. You need to review the amount of time you'll have to tending your investments and the amount of stress and ups and downs you can handle before selecting aggressive v conservative.

But - you can have both. You can, for instance put 65% of your investment sum into one type and the other 35% into the other - changing the % amounts to suit your own comfort level. Obviously this strategy would be determined largely by your current finances!

But the best investing advice I can give you is actually hidden in this piece.

Develop a realistic, motivated game plan that is unique to you and your current (and intended future) position. Nurture it, grow it, watch over it and you'll harvest a huge, huge crop at the end.

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