How To Invest Wisely
By Myles Johnstone
Why should you bother investing at all when your neighborhood bank is a nice, safe place to put your money? The answer: inflation and taxes. If your savings, after taxes, doesn't grow faster than the cost of living, its purchasing power will steadily erode. Put another way, if you don't find a way to put your money to work for you effectively, you'll never be able to reach the financial goals you cherish. In short, after you take care of your emergency savings fund, you need to become an investor. The following example, which doesn't even account for the take of taxes, will show you why:
Had your grandmother stashed $90 under her mattress 50 years ago, (the price of a decent-quality, three-piece bedroom set in 1945) that money today would buy little more than a set of sheets. If she had invested that $90 in a bank savings account that kept even with inflation, she could still afford that roomful of furniture. But if she had put her 90 bucks in the stock market, it would have grown to more than $25,000 today: enough not only for that bedroom set, but for a down payment on a second home to put it in.
If that story doesn't impress you, here's a scarier one: Investing wisely can mean the difference between retiring to a cushy house on the 18th green or retiring to a state-run oldsters' home. Saving, while extremely important, is essentially just putting money away for safekeeping. Investing, by contrast, is using your money to produce more money.
Are you thinking that you need a lot of money to invest? You don't. Many equity mutual funds, which pool money from small investors and use it to buy stocks, accept initial investments as low as $500 or even $250. More than 140 fund families let you in with $100 or less. Most funds also let you invest as little as $50 or $100 a month. You can also see what it's like to be a stock investor buy purchasing a single share of a company for, say, $30.
If you haven't invested a dime in your life, you're not alone. Millions of Americans don't own any stocks or mutual funds. Some of them have just decided that they don't know enough to invest intelligently. Others think that investing is too scary and worry about the possibility that they'll lose money. Still others think that investing in stocks and mutual funds is no different from playing the craps tables. The truth is, it isn't hard to learn how to invest, putting money into stocks or stock funds isn't scary, and by investing defensively, you can protect yourself from losing money. As for the craps analogy, it's flat wrong. Winning at dice means having good luck. Winning as an investor means using your brains.
About the Author
Myles Johnstone writes exclusively for finance related sites such as Refinancing Finance Info.com, Vehicle Finance Info.com and finance Solutions info.com
Source: Top Finance Articles
NOTE: You may only use this article if the source, author details and links remain and are kept active. We use copyscape and other similar tools to ensure our content has this information with the article.
Below are a few more financial articles:
3 Drawbacks Of Having A Company Monitor Your Credit
4 Reasons Why Real Estate Is A Good Investment
5 Questions To Ask A Financial Planner
5 Simple Ways To Save More Money
6 Rules To Building Wealth And Satisfaction In Life
A Couple's Guide To Following A Budget
Amazing Opportunities Now And In The Future
Are You Financially Insane
Do You Sacrifice Integrity For Short Term Financial Gains
Does The Lack Of FDIC Insurance Make Money Market Funds A Bad Choice
Effective Ways To Reduce Your Federal Income Taxes - Part 1
Effective Ways To Reduce Your Federal Income Taxes - Part 2
Financial Success Through Personal Hard Work
Getting the Pay You Deserve
How To Become A Smart Borrower - Part 1
How To Become A Smart Borrower - Part 2
How To Invest Wisely
Into Mutual Funds - Be Sure To Diversify
Investing In Your Own Business
Minimizing Taxes On Funds
Planning For Retirement
Preparing For Your Children's College Education
Resisting Temptation To Spend Your Money
Simple Ways To Increase Your Savings - Part 1
Simple Ways To Increase Your Savings - Part 2
The Importance of Saving
Two Keys To A More Successful Career
What Is A Mutual Fund
Which Is Financially Easier - Renting Or Buying
Your 1st Step To Financial Freedom - Putting All Of Your Debts In Writing
A few more small articles about finance matters:
3 Rules That Debt Collection Agencys Must Follow
Credit Monitoring Services
Everybody Can Find Money To Invest
Marshmallows, Resisting Temptation, and a Satisfying Life
Need More Money - Then What Are You Doing About It
The Truth About Medicare - Will It Cover You When You Need It
What Are Dividend Reinvestment Plans
What are savings and money market accounts
What Do You Want From Your Money
What Is Estate Tax
What Is My Bank Account Really For
What To Do If You're Already A Victim Of Financial Fraud