This is going to sound silly, but I don't know where to start when it comes to investing. I need to start putting money aside, and I would like that money to grow over a period of time. I don't understand how to buy shares, make trades, or sell stocks. (I might have got all of that lingo wrong.) I wanted to ask real people what they are doing, so I thought I'd post this on HubPages. I know that if I go to my bank or hire someone, I will get a sales pitch. My family has suggested that aside from starting an IRA, I should invest in something. Where should I start? And, how can I spot a good investment?
I would suggest going to a mainstream place like fidelity and having a chat about how to invest without taking to much risk. They have some nice diversified options that will grow your money a modest amount without to much risk of losing the principle. A starting consultation is usually free.
Learn what type of investor you are too. Can you handle volatile stocks which may swing up and down by 30% or more in 3 to 6 months. I just got creamed by selling one too quickly and losing out on $8K due to fear. ** cough ** Netflix ** cough)
So many people want to put money away and get some sort of decent return. As a financial advisor, I would not give you any sort of sales pitch and I highly doubt any bank advisor would do that either. To be honest, advisors are paid commissions based on the dollar amount they invest for someone. If someone walks in with 350K and wondering what they should so with it, of course they will try to sell them the best product for them and in turn make a decent commission.
If someone walks in just trying to figure out how to start saving money, I would tell them to simply create an account, it could be an IRA or a basic savings account and just start putting money in it on a consistant basis. Yo have to start somewhere.
Let's look at the facts. Let's say you had $1,000 to start and you earned a 5% return, you will have made $50 for that year. Even though 5% is unheard of in a savings account, it gives you an idea of what type of "return" you are looking at.
When you are just starting out, your main focus should be making a consistant effort to put money aside. Pick an amount that you are comfortable with every month and stick to it. If your job has a 401K. that's the first place I would start. Pick an amount that you can put into savings as a backup, and an amount that you will NEVER touch until retirement.
When raises come around or debt gets paid off, increase your contributions and get used to setting aside those funds. Before you know it, you will have the beginnings of a nice little nest egg for yourself. At that point you can talk about risk tolerance and volitility because it will be YOUR hard earned money, and your decision what to do with it. That's where a good advisor can come in to the mix and be able to point you in the right direction.
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