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INVESTING BASICS : : Getting Started

I'm in my 20's, I don't need to worry about Investing or my finances, because I'm still young.

Whether your financial goal is buying a home, or planning for retirement, investing will assist you to manage your money and your future. People invest because they want to create a sense of security, increase their personal freedom, and have the ability to afford the things they want in life. So even if you're starting from scratch or have a few thousand dollars saved, the key to investing, is having a basic understanding of where to invest, how much to invest and when to stop investing.

Investment 101
Start saving early, as this allows your money to work its hardest for you. It doesn't matter the amount, set aside monthly or quarterly a portion of your income and watch that money grow and generate earnings over time.

Below are a few investing tips to help you get started:

  • Assess your current financial situation - Make a list of all your expenses, such as food, rent, entertainment and compare it to your income, and see where you can minimize or eliminate the amount of money spent, so as to make room for investing.
  • Set your future goals - Ask yourself the question what am I investing for? College? Retirement? A house. Make note of your goal(s) and when you would want them achieved.
  • Diversify - With investing comes risks, however, diversifying your money will help reduce those risks. Diversify through asset allocation. Asset Allocation is the process of dividing investments among different kinds of asset classes, such as stocks, bonds and cash, to try to meet specific financial goals. Over time, it's important to review your goals, the progress you've made, and whether or not you have new or different goals. You should do this review process at least two or three times a year.
  • Think long term - Very few people can consistently make money on the stock market by taking advantage of quick highs and lows. Instead, experts agree that long-term stable investments get you the surest return on your dollar. Long-term investing will also get you over the short-term lows that practically every company experiences, leaving you smiling when the price goes back up. Patience is a virtue. Maintain the discipline to hold onto or add to appropriate investments through down markets as well as up markets.
  • Keep emergency money - In order to keep you from dipping into your investments, reserve three to six months' salary for emergencies. This will also ensure that you will sell your investments at a profitable time, rather than when you need money.

Always keep in mind your future financial goals!!!