Investing
Investing is a method to save money toward your goal whether it
is funding for retirement or saving money for your children's college
education. How you want to save your money is your decision, but
remember to use your personal financial plan as a guideline.
Why invest money instead of having a savings account
at a financial institution?
A savings account is usually used for short-term needs, such as
vacations or emergencies, and generally have low interest rates.
While investing is a good way to "grow" your retirement fund or
savings plan, remember that account growth comes from return on
your investments. Choices such as stocks, bonds, mutual funds,
and stock funds are available, so research is necessary. Intelligent
decisions come from understanding the funds in which you decide
to place your money.
How do I learn about investing?
There are numerous books and newspapers containing articles on
investments (consult the business section of your local library).
Most brokerage houses have an Internet address, such as www.morningstar.com
and www.ml.com, which offer statistical information on stocks,
mutual funds, and bond funds.
The National Association of Investors Corporation (NAIC) is a
national organization created to help new investors learn about
the stock market through investment clubs. Through club activities,
members learn to recognize and understand the many possibilities
available in stocks, mutual funds and bond funds. Clubs form their
own groups of members to study the stock market, invest an amount
of money (many club members begin by investing small amounts of
money each month), and then track each investment's performance.
You can access their website at www.better-investing.org.
What do I look for in stocks or mutual funds?
Keep your goal in mind when determining the kinds of stocks or
mutual funds you want to invest. Do you want a stock in a well-established
corporation or are you looking for a smaller company with possible
growth potential? If you're interested in mutual fund investment,
know what your fund contains - is it a bond fund, a stock fund
or a diversified fund that is well-balanced and less vulnerable
to changes in the market?
The market does fluctuate so it's important to stay informed about
your investments and be willing to stick with a plan long enough
to gain the value of growth through interest. It's also important
to evaluate your plan from time to time to make sure it's meeting
your long-term goal.
What about risk?
Risk is an ever-present component in the stock market. It's important
to understand your tolerance for risk. If you're lying awake at
night worrying about your investments, you may want to think about
changing direction.On the other hand, don't stretch your risk tolerance
to the level of "gambling" to make a fortune. The point of investing
is to establish a fund of money which will grow.
Decisions, decisions - how can I make mine?
Remember, it's your money and your personal goals that are most
important. An investment of time and research will help you toward
building a strong financial plan.
The above information should be understood to be a general
discussion of the subject matter and DOES NOT constitute
a legal opinion about the situation. For further information
please consult a qualified attorney.
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