Basics of Investing
Investing is the outlaying of money in order to earn a future financial return. Investing is important for generating money to meet long-term needs and goals. Everyone needs money for two basic purposes: to pay for everyday things (food, transportation) and to pay for major things (car, house, retirement, education).
Understanding Stocks, Bonds & Mutual Funds
If you want to earn significant gains for a long-term goal, such as retirement, stocks may be your best choice. Stocks, also known as equities, have historically offered the best long-term returns and the greatest protection against inflation. However, they also carry the greatest potential for short-term price volatility. Since you are an owner of the company, the value of the ownership rises and falls with the fortunes of the company. There are basically two types of stock, common and preferred. Another important fact about stock type is the different classes of stock that corporations may issue.
Maybe your goals are such that you need a fixed rate of return in the near term. Then bonds may be for you. Bonds have traditionally been seen as income-producing investments. You buy a bond, hold it to maturity and receive a regular interest payment. Then when the bond matures, you get your principal back – guaranteed by the issuer. When you buy a bond, you are essentially making a loan to a company or government. Bonds are issued by corporations, the U.S. government, federal agencies, state and local governments and their agencies. As a bondholder, you are a creditor and must be paid your interest in good times and bad regardless of the issuer’s financial standing – unless the issuer declares bankruptcy.
Most investment professionals agree that it’s smarter to own a variety of stocks and bonds than to gamble on the success of a few. But diversifying can be tough because buying a well-diversified portfolio of individual stocks and bonds in a variety of markets and industries can be very expensive. And knowing what to buy – and when – is often a full time job. However, you can let the professionals handle it. Mutual funds offer a way to diversify on a budget. When you put money into a mutual fund, your investment is pooled with money from other investors to create much greater buying power than any one individual would have. This way, you own a piece of a large and well-diversified portfolio.
Understanding 529 College Funds
With the current cost of a college education and its projected increases, this topic is extremely relevant and will affect your future, your family’s future, and certainly your children’s future in a very profound way. How will you, as a parent or grandparent of a future collegian, pay for four or more years of college at the institute of higher learning your child wants and is able to attend? How will you do so without sacrificing your present and future financial health, without you and that child having to pay back loans for the rest of your lives?
Understanding Individual Retirement Accounts
Understanding Annuities
We all know that retirement planning is extremely important, especially with the rising costs of living and the dwindling resources of Social Security and other government programs for seniors. There are many tools that can be utilized to generate income during the retirement years, many of which you have already heard about in this site. Annuities are another way to secure a means of cash flow when full-time work ends. An annuity is a unique financial vehicle designed to help people accumulate money for their retirement and/or turn a lump sum of money into a guaranteed stream of income payments.
Starting & running an Investment Club
