Friday, October 23, 2009

Should I Use My Money for Investing?

Starting out, you could get involved with ETFs like the Rydex S&P Equal Weight, which invests equal sums in the stocks of the 500 companies in the S&P 500. ETFs are similar to mutual funds in that they hold assets like stocks and bonds but can be traded individually instead of by a fund manager.

The most important thing to remember is to diversify your investment portfolio. This means that instead of sticking with only stocks, bonds, mutual funds or ETFs, include a mix of some or all, as well as other types of investments, to make sure you're getting both risky and safe assets in your portfolio.

Some Additional Tips to Remember

Once you dive into the investment game, whether it's via stock market investing only or a blend of many (which is recommended), you should begin to feel more comfortable with your choices. No matter how comfortable you feel, however, it's good to remember a couple of things:
  • Don't be so eager to follow the crowd: While it may be tempting to follow trends in investing, sometimes it's better to trust your gut (and research). A lot of times, the crowd is working from human emotions (buy when times are good, sell when times are bad). However, the most successful investors will tell you that thoroughly investigating an investment option and not making trades based on fear can get you a long way.
  • Don't buy high and sell low: As noted in the previous tip, many investors will quickly buy when they see that an investment is popular and sell when they get scared. This could result in you buying high and selling low, which means you're likely to lose more money than you make.
The good news is that you can absolutely get involved in investing with just a little to start. Just take time to do some research, open an online account and watch your small amount of money begin to grow.

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