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The Basics of Investing and Increasing your Income

Updated on January 8, 2012


There is no time where it would be too soon to be thinking about investments. It makes great sense to put your money to work and earning more money with it. That is basically what investing is. Often it is difficult to meet all of one's financial goals, but investing done wisely, has helped many people achieve their goals. The bigger financial choices like buying a home, paying for college, or having a stress free and comfortable retirement are all things that can help be made possible by making wise financial decisions all along the way.

I think there is a big assumption among many people out there that investing is for people that already have a lot of money, but that is not the case necessarily. While being wealthy can certainly help, it is not a must to be able to invest. Why not consider investing small amounts over time? Many people have reaped considerable amounts by doing just that. Investing regularly can pay off.

Of course, there are decisions to make along the way, like how much you want to invest, and where to invest it. You will want to know what your options are, and what the risks are. This way you can make the most informed decision possible and help your money make money.

Investing, putting your  money to work for you
Investing, putting your money to work for you
The NY Stock Exchange
The NY Stock Exchange

Basics of Investing

There are some very basic things to understand first when considering investing. The three main categories for investing are cash, stocks, and bonds. With cash, this would include your money in bank accounts, Certificates of Deposit, and U.S. Treasury bills. Bonds are basically loans that investors make to the government and corporations. Stocks are ownership shares that investors can buy in a corporation.

People choose to invest in a lot of different ways, and they do so directly or sometimes pool their money with others in mutual funds indirectly. People can have their money pooled with others, and then it is all invested together. There are stock mutual funds for instance that buy stocks, and money market funds make cash investments.

If you want to invest there are many opportunities to do so. I live in the United States currently, and there are thousands of stocks and mutual funds to choose from. There are millions of of government and corporate bonds to choose from as well. There is the world market of course, and you can choose to invest there whether in developed or emerging economies.

There are thousands upon thousands of banks, brokerage firms and financial advisers to work with the United States alone.  People invest sometimes directly with the issuer whether it is a corporation, government or an investment company. Many people currently invest online with their computers. So you can see there are many options to consider if you want to put your money to work for you.

The NY Stock Exchange
The NY Stock Exchange


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    • oceansnsunsets profile image

      Paula 6 years ago from The Midwest, USA

      Thanks Phoenix, glad you stopped by!

    • PhoenixV profile image

      PhoenixV 7 years ago from USA

      Great hub and great advice.

    • oceansnsunsets profile image

      Paula 7 years ago from The Midwest, USA

      I agree, about losing the mindset of fast returns, though that would be nice. Its just not that reasonable though. I like the idea of letting the money and investment "do its thing". Thank you for your comment, Rpalulis.

    • rpalulis profile image

      rpalulis 7 years ago from NY

      Thanks so much for covering the basics of investing. You are absolutely right it is never too late to invest, and you do not need lots of money to do it. Whats the old saying, "slow and steady wins the race" We can become so impatient and want to see immediate returns. I have found that once you invest just walk away from it, and let the investment do its thing. It is fun to track your profits, but lose the mindset of making fast returns.