Invest Money

Invest money now spend money later. Investing is essential to making money. You have to invest money to make money. Whatever your motto may be the idea to invest money is larger now more then ever and continues to grow more and more each year. The demand for knowledge on how to invest money and what investment ideas make the most sense is in such a high demand today that cable television now has channels 100% dedicated to investing. Also, if you went to a bookstore 20 years ago looking for books on how to invest money you might find a couple dozen. Now, you will find hundreds. The point is that investing is now part of our lives. If you want to own a house on Newport Beach, your name is not Tom Cruise or Kobe Bryant and you are not doing executive job search in some of the world-known companies, you need to know how to invest money wisely.

The great thing about investing in today's world is that there are many avenues available for people to invest money. The most common known areas to invest money are stocks, bonds, mutual funds, real estate, and e-commerce. Everybody plans to invest money in the stock market and for good reason because the stock market is a great way to make money. Millions of people have made millions of dollars in the stock market. However, millions of people have also lost millions of dollars in the stock market. The stock market is the poster child for high risk, high reward investing. That is why if you plan to invest money in the stock market, it is of great importance that you do your research on any company you have interest in investing in. There are no guarantees with the stock market nor are there any ways of completely knowing if the market is going to crash. That is what makes investing in the stock market a high risk. However, the stock market is the quickest way to make big money. In no other investment can you buy 20,000 shares at $1 per share and in 1 week watch the cost per share go up to $10 and new you have profited $180,000. That is your high reward for investing your money in the stock market.

Baca Juga Program Investasi Paling Di Rekomendasikan


The stock market may be the most common area people actually invest but real estate is the most common area people WANT to invest. People want to invest in real estate because it is a much safer investment then the stock market and still has the potential to be highly profitable. The reason that real estate is a safer way to invest money is because the real estate market does not fluctuate as often or as extreme as the stock market. Also, the real market typically does not fluctuate down. History has shown that real estate values are usually on the rise, especially in big markets such as California, New York, and Florida. Due to this, over time your investment could be worth hundreds of thousands of dollars. Also, most people have more knowledge about real estate then stocks making them feel more confident about their investment strategies. The reasons more people invest money in stocks rather then real estate is simple; you don't need nearly as much capital to buy stock and more importantly, there is an unlimited amount of stock and only so much real estate.

Another great aspect of investing in today's world is that you don't need large amounts of liquid capital to invest in something. Although, the more money you invest the higher your return will be, assuming the investment makes a profit. If the investment flops then you're lucky you did not have much to invest. However, it is still great to be able to invest money without having much. A great way to invest with little money is through Dividend Reinvestment Plans (DRPS), also know as Drips, and Direct Stock Purchase Plans (DSPS). These plans allow you to buy stock directly from the company without having to deal with brokers and the high commissions they may charge. Most companies that offer these plans allow the investor to invest as low as $20 each time and the investor is not required to purchase a full share each time a contribution is made. While you have to keep great tax records due to the frequent amount of purchases, these plans are a safe way to get involved in investing and make money over time. If those plans are not fitting and you have a few hundred dollars available you can invest in index funds, which usually get an 11% return each year. Either way, these programs are a great way to invest little money with little risk and still be able to see extra income, all while giving you the opportunity to become familiar with the world of investing.

Invest money now spend money later. Investing is essential to making money. You have to invest money to make money. No matter how you put it the pathway to financial freedom is led by investing. You don't have to invest all your money in one area and you don't have to invest all your money. Just invest something somewhere. The age of investing is here to stay. No more will the days of living solely on your paycheck be acceptable. Not unless your paycheck is signed by the New York Yankees.



Why Should I Invest?
Welcome to Investing Basics! If you've found your way here, chances are you've either got some money socked away or you're planning to do so. But first things first. Why is investing a smart idea?

Simply put, you want to invest in order to create wealth. It's relatively painless, and the rewards are plentiful. By investing in the stock market, you'll have a lot more money for things like retirement, education, recreation -- or you could pass on your riches to the next generation so that you become your family's Most Cherished Ancestor. Whether you're starting from scratch or have a few thousand dollars saved, Investing Basics will help get you going on the road to financial (and Foolish!) well-being.

Know your goals
What are you saving for? Retirement? College for the kids? A new speaker system complete with woofers and tweeters? An exotic animal menagerie complete with Chihuahuas (woofers) and canaries (tweeters)? A retirement villa in the sun-baked hills of Tuscany?

Say you take $2,000 of your savings and put it into the stock market. If your money returned 10% a year (the S&P 500's historical average), two grand would be worth $34,898.80 after 30 years. That might not get you the perfect retirement home, but it'll at least give you a down payment.

Maybe you don't have $2,000 burning a hole in your bank account, but perhaps you can afford to invest your lunch money. Brown-bag your lunch and sock away just $4 a day, 250 days a year. It's not a lot, but if you're in your early 20s, you've got the investor's best ally on your side -- time. If you invest $1,000 once a year in an investment that averages a 10% annual return -- the average annual stock market return since 1926 -- it'll grow to more than $1 million after 46 years, which is right around the time you'll be ready to retire.

Of course, as you get older and more financially stable, you should be able to put away more to invest. Upping the ante to just $166 a month -- which is probably less than lunch money plus what you pay for cable TV -- would put you at the million-dollar mark in just 39 years.

The power of compounding
The table below shows you how a single investment of $100 will grow at various rates of return. Five percent is about what you might get from a certificate of deposit (CD) or with a government bond over time, 10% is about the historical average stock market return, and 15% is what you might get if you decide to learn how to pick your own stocks and take advantage of some of our lessons in advanced investing techniques.

Growing At
Year
5%
10%
15%
20%

1
$100
$100
$100
$100

5
$128
$161
$201
$249

10
$163
$259
$405
$619

15
$208
$418
$814
$1,541

25
$339
$1,083
$3,292
$9,540


Why is the difference between a few percentage points of return so massive after long periods of time? You are witnessing the miracle of compounding. When your investment gains (returns) begin to earn money, and then those returns start to earn money, your investment can mushroom very quickly. Extend the time period or raise the rate of return, and your results increase exponentially. For instance, if you start young, say at 15 years of age, note how quickly a single $100 investment grows, especially in the later years.

Growing At
Age
5%
10%
15%
20%

15
$100
$100
$100
$100

20
$128
$161
$201
$249

25
$163
$259
$405
$619

30
$208
$418
$814
$1,541

40
$339
$1,083
$3,292
$9,540

50
$552
$2,810
$13,318
$59,067

60
$899
$7,298
$53,877
$365,726

65
$1,147
$11,739
$108,366
$910,044


Looking at it another way, let's compare two teenagers and their lifetime savings habits. Bianca baby-sits a lot and spends most of her spare time reading. She saves $1,000 a year starting when she's 15 and invests it in the stock market for 10 years earning 12% per year on average. After 10 years, she comes out of her shell, stops adding money to her nest egg, and spends every penny she earns club hopping and on trips to Cancun. But she keeps her nest egg in the market.

Compare her account to that of her friend Patrice, who squandered her early paychecks on youthful indiscretions. At age 40 Patrice gets a wake-up call when her parents retire on nothing but Social Security. She starts vigorously socking away $10,000 every year for the next 25 years. Guess who has more at age 65? That's right, Bianca. (You figured it was a setup, didn't you?) Her 10 years of saving $1,000 per year (just $10,000 total -- the same amount Patrice put away in just one year) netted her $1.8 million by age 65. Patrice, on the other hand, scrimped for 25 years to invest a quarter million dollars out of her own pocket and ended up with just under $1.5 million. Neither will be going to the poorhouse, but you see our point: Bianca's baby-sitting money grew for 50 years, twice as long as Patrice's, and Bianca barely missed it.

(It's almost not fair to mention this, but if Bianca put her money in a Roth IRA, that whole $1.8 million would be tax-free. On the other hand, Patrice couldn't put her full $10,000 in a Roth, so Patrice will pay capital gains tax on a good deal of her gains.)

The power of compounding is the single most important reason for you to start investing right now. Every day you are invested is a day that your money is working for you, helping to ensure a financially secure and stable future.

Common pitfalls to avoid
Before you race off through the rest of Investing Basics, there are some cautionary points to consider before you proceed. These are common mistakes many people make when considering what to do about investing.
Doing nothing. There is no guarantee that the market will go up the first day, month, or even year that you invest in it. But there is one guarantee: Doing nothing at all will not provide for a comfortable retirement.
Starting late. Postponing your investing career is second only to not investing at all on the list of investment sins. You already know that the earlier you start the better off you are. (Take another look at the compound return example we gave above.) If you're already past those formative twenties (you don't look a day over 32 to us), we'll reword this first pitfall to read: "Not starting now."
Investing before paying down credit card debt. If you have money in your savings account and you have revolving debt on your credit card, pay it off. Many credit cards have an annual interest rate of 15% or more. Let's say you have $5,000 to invest, but you also have $5,000 debt on your credit cards with an average annual interest rate of 18%. It doesn't take an astrophysicist to figure out that you're going to have to get an 18% return after you pay taxes just to break even on that $5,000. Pay the debt off first, then think about investing.
Investing for the short term. Only invest money for the short term that you're actually going to need in the short term. Invest money in the stock market that you won't need for at least three years, and preferably five years or longer. If you'll need your cash next year for a down payment on a house or for the family Caribbean cruise, use one of the shorter term and safer havens for your cash, such as money market funds or CDs.
Turning down free money. You'd never turn down a dollar if it was offered with no strings attached. That's what you're doing if your company offers a 401(k) or similar retirement savings plan with an employer match and you're not participating. Take advantage of all tax-advantaged, employer-matched savings programs.
Playing it safe. If you're young, most of your investing dollars should be in the stock market. You have enough time to weather any dips in the market and to reap the rewards of long-term gains. Although you may want to transition into bonds later in life as you depend on your investments for income, stocks should make up a large portion of the portfolio of every investor.
Playing it scary. Not every investment is for everyone. Even if you're a daredevil, you shouldn't pour all of your money into something that could end up going down the drain.
Viewing collectibles or lottery tickets as investments. If old comic books, Barbie dolls, and abandoned exercise equipment could be used to fund retirements, do you think the stock market would exist? Probably not. Don't make the mistake of thinking your jewelry, those Beanie Babies, or the lottery will provide for you in your latter years.
Trading in and out of the market. We believe the best approach to investing is the long-term one. Pick your investments well and you'll reap greater rewards over the long term than you had ever dreamed possible. Trade in and out of the market and you'll be saddled with fees that chip away at your returns, and you'll potentially miss out on gains that long-term investors enjoy with much less effort.

Congratulations! You've made it through the first part of Investing Basics. (Bet you didn't even break a sweat.) You've witnessed the power of compounding and you understand how some common pitfalls can ruin even the healthiest investing plan. Now, let's turn to the various ways you can start investing.