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Investing for Beginners

9 February 2017 One Comment

Everyone knows that you need money to make money and if you have money then now is the time for you to make the most of it. Understandably the young generation right now might not feel qualified to enter the world of investment, but all you really need is a bit of guidance.

To put it in the most basic of basic turns, investing is simply a process of putting your money somewhere with the aim of getting more money back. This could involve either buying something or lending your money out to someone. It’s a fairly simple process. But, the difficulty is in knowing the right thing to invest in. While there are a lot of different types of investment, there are only a few that you should focus on while you’re still new to the game. These are called ‘asset classes’ and the ones you’re going to want to remember are Cash, Shares, Fixed Interest Securities and Property.

Cash

Cash investments are usually very short term loans that give you a small reward. This is the investment route that carries the least risk. In fact, you might already have a cash investment and not even be aware of it. Do you own an interest savings account? Congratulations! You’re already an investor. While Cash investments have low interest there’s very little chance that you’ll lose any of it, so it’s one of the safest ways to invest.

Shares

On the opposite end of the scale to Cash, there are Shares which is a type of investment with the most risk. This type of investment involves buying a stake in a company and you have practically zero control regarding how much money you’ll get back from it (if any). In fact, investing in shares can even result in losing money, which is why it’s normally the pros that get involved.

Fixed Interest Securities

This type of investment normally functions like a long-term loan. Rather than buying a stake in a company and risking getting into debt, you simply lend the amount to a company. Over time, while you still hold the security, they will pay you interest at regular intervals for an agreed term.

Property

This type of investment is also pretty risky, but it can reap unbelievable rewards. Here you simply purchase a property and use it to make money by either renting it out or by selling it at a higher price. You can invest in long term and wait for the value of the property to increase over time, or you can ‘flip’ it by fixing it up after you’ve bought it and selling it on right away.

Each of these types of investment will give you different returns (‘returns’ is what you would call your profit) and they each come with their own risks. While you’re young and not exactly a millionaire yet, it’s probably better to stick to the lower risk investment options. But, the truth is that taking risks is the only way to make big money. While a calculated risk here and there can be smart, you should never use a loan or any money that isn’t yours to invest. Returns can be unpredictable, so even though secure short term loans online can be used in emergencies they should never be used to invest. Start small if you must and keep learning. Investing is something you need to study and practice, so don’t be stressed if your first investment doesn’t go anywhere.

One Comment »

  • Dan said:

    Great article, funny enough some times we just think about savings as mandatory money that we put away. However, when we just think about it we could be saving much more if we just put our mind to it.