Invest money in market mutual funds by consulting a stock broker about picking funds, visiting a discount broker or going to a timing service that will invest in funds for you. Consider the total charges for investing in different mutual funds with advice from a financial consultant in this free video on investments. Expert: Roger Groh Bio: Roger Groh is the founder of Groh Asset Management. Filmmaker: Bing Hu
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Many investors want to include some equity or stock investments in their investment portfolios. They might buy some common stocks or equity mutual funds or a blend of the two. However, mutual funds and stocks are not the correct investment option all the time.
Who are the potential investors of stocks and mutual funds?
People who prefer to invest in stocks and mutual funds are those who frequently:
Feel at ease with assuming some risk to go after higher returns
Have an extensive time period (they have a long period to invest, hence they can select the time to sell)
Who are less probable to invest in stocks and mutual funds?
People approaching retirement or any other occasion when they would want their money don’t wish to invest in mutual funds and common stocks. They shift their money to investments with a steadier or assured return. For instance, they might invest in preferred stocks as a means to generate a stable flow of income.
Stock diversification in your portfolio
Stock diversification in your portfolio refers to having a blend of various types of stocks in your portfolio such as stocks of companies from various sectors. It can also suggest investing in holding company stocks or equity mutual funds. Through diversification of your equity investments, you can minimize risk and expect improved returns.
Are mutual funds and stocks good options for you?
The right blend and categories of equity investment might vary as time passes by. Question yourself:
Is there any logic to raise or lower the level of mutual funds and stocks in my portfolio?
Has the time come to modify my equity investments – either through buying or selling?
You should keep in mind that your investments should suit your age and risk tolerance level. These might vary with time. Make arrangements to evaluate your equity investments once every year as a minimum either without help or with the assistance of a financial counselor.
Ok, now you have your money after saving it from the hard work you have done in previous years. So where can you invest your money? That is a million-dollar question. There is no same place for every one to invest. The first two thing you need to know before asking that question are:
How much is your investing target return
How much risk are you willing to take
So your answer might be, “I want a ten percent return with minimal risk”. Sounds realistic? Remember that the higher return you want, the riskier it will be. There are many kind of investment out there. The most common place to invest money are to stocks, bonds, mutual funds, real estate, and starting your own business. Each investment has their own characteristic. It’s your job to know their characteristic and match it with your preference.
Bond, mutual funds, and real estate generally have lower risk than stocks and starting your own business. With stocks you can loss your money in minutes. Imagine if you had bought Citibank stock at the start of the year at $7 per share. Guess how much it is now? It’s around $3 at mid July. A 50% drop in half a year. See how you can lose money from stock. The same applies if you own your own business. There are many companies that are closed at it’s first year. Imagine how much money you could loss this way.
If you don’t know anything about investing and want to leave it to the pros, then you can try mutual fund. A mutual fund is a professionally managed type of collective investment that pools money from many investors. Although it is professionally managed, it does not means that you won’t lose money from it. Those professional can also loss money, but at least their knowledge is a lot more than you.
