Investing for Dummies: What You Need to Know

investing-for-dummiesWhen it comes to investment, there seems to be a lot of confusion about the best methods and the best strategies in order to build up a great retirement fund. This is understandable considering that most of us do not deal with stock markets, world economic trends, or commodities. In other words most of us could probably use some help from an investing for dummies type of book. While there is almost certainly a book under that title, investment is too important to rely on a quickly ghost written book that relies on a basic publishing formula and cookie-cutter solutions.

Know Your Goals – The First Investing Tip

The first thing you need to know before jumping into the investment world is your final goal. Are you looking to keep some money safe while seeing only moderate growth over the next 10 or 20 years? Do you need to take chances to build wealth fast because you are way behind your goals, or do you want a portfolio with mostly upside because you started early and have your whole life ahead of you? The exact goal you have makes a huge difference when it comes to knowing the best route to take when you finally get around to investing your money.

Know Your Options – Not Just for Dummies

There are many different options out there when it comes to investing your money, however most of them are not suitable for the majority of people. Ignore anything that talks about trading the Forex, binary options, scalping commodities, or anything that talks about automated riches. There is no such thing as easy automated investment riches.

When interest rates are high, items like savings bonds, municipal bonds, and savings accounts can offer some decent return that really builds up over time. However, when interest rates are not high or inflation is high that doesn’t really keep up with expenses. People have the ability to invest in businesses, look up the concept of angel investing, or there are many peer lending websites online that allow you to play the role of the bank and collect on the interest as payments are made.

Then there are the popular choices of index funds, stocks, and the 401(k)/Roth IRA. These allow people to invest in the markets even when they don’t have enough money to directly buy stock. Part of getting out of the investing for dummies group is understanding the difference between these options and which ones are right for you.

The simplest route, and one that should be at the very top of every single investing for dummies class, is going with an index fund. An index fund mimics one of the stock markets, or else a certain part of the stock market. This is done through buying a variety of stocks and these can be an extremely good way to ride the market trends over time assuming you find a high-quality low fee fund. You want to find something that is less than 1% like many of the Vanguard indexes are.

While there are many options out there, until you learn more you should go with the simple yet effective index funds for your ivnesting.