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Choosing the Right Investment for Your Situation

6 March 2013 3 Comments

1084293_13459611Your age, income, and lifestyle should have big impacts on the kind of investments that you choose. Use this guide to learn more about choosing the right investment for your situation.

 

Stocks: Risky With a Chance of Greater Wealth

If you are young, it makes sense to put a lot of your investment money in stocks. Stocks go up and down every day. That means you have no guarantees. A stock that earns a lot of money today could crash tomorrow, leaving you with nothing.

This volatility can devastate investors close to retirement. If you still have a few decades until you retire, though, you have a longer time to recover from market dips and crashes. Plus, stocks give you the best opportunity to generate big returns for your money. Over the long-term, this is your best option for making more money.

Paying attention to advice from investment professionals can help you avoid troublesome industries and focus on markets that will likely grow. Fisher Investments videos, for instance, will show you what areas of the world economy will likely grow in the upcoming year.

 

Money Market Accounts: Little Risk With Small Returns

 

If you are close to retirement, then money market accounts give you a good place to park your money with little risk. This investment option also gives you easy access to your money. In most cases, banks will let take money out of your account without penalties as long as you maintain your minimum balance. That’s useful for people who aren’t happy with the interest rates they get from savings accounts and have enough money that they can leave it alone for years at a time.

Unfortunately, money market accounts don’t usually keep up with inflation. If your account offers three percent interest and inflation grows at four percent per year, then you’re losing a little money every year.

 

Bonds: an Opportunity to Offset the Risk of Stocks

 

Bonds offer a middle road between money market accounts and stocks. They don’t have the earning potential of stocks, but they also don’t have as much risk as stocks. They usually earn more money than money market accounts, but they’re not quite as reliable and they don’t give you easy access to your money.

Many people use bonds to offset the riskiness of stocks. When you’re young, you should only put a small amount of money in bonds. As you get closer to retirement, you can shift a larger percentage of your investment money to bonds for more financial protection.

 

Opportunities in Real Estate

 

Many cities are still trying to recover from the housing crisis. That creates a good investment opportunity for those who have enough money to purchase real estate outright. Values are starting to climb, though, so the sooner you buy, the better your price will be.

This investment option works best for people who can afford to part with a $200,000 or more. Otherwise, buying property could hurt your lifestyle. You will likely make the money back over time, but that could take years.

What investment options have worked well for you?

http://www.nd.gov/ndpers/forms-and-publications/publications/investment-foundations.pdf

3 Comments »

  • settlement payments said:

    Presently real estate is most convenient option of investment because the pace at which its growing is fast and rigid. However it involves lots of cautions as compared to other methods.

  • Phil Moore said:

    This is a good post and people will do well to head the advise. It is worth noting that even so called 'safe' investments can also actually be high risk. Look at the way gold has moved recently. Also the bond market could be due a fall. Always diversify no matter how safe an asset looks!

  • Robinsh said:

    I also know that Real Estate business is the best option for safe and higher returns on an investment amount.