Do you want to know all about investing in stocks, mutual funds and bonds? These are great ways of making money. Here are a few basic tips that will get you started:
The greatest threat to your long term investments is inflation. Inflation hardly gives back the portion of value it slices off your investment. It is advisable to put your investments, especially long term ones, where they will earn long term returns.
It is always good to spread your money in a number of investments instead of only concentrating on bonds or stocks. This way, you reduce the risk of all you money going down in case of a financial loss.
Put your money in investments that seem risky as they pay more than the so called “safe investments”. Many investors demand high rates of returns for taking greater risks.
One of the investments you can rest assured will pay is the U.S. Treasury bonds. This is because the U.S. economy has over the years been fairly strong. The interest rate for Treasury bonds is not affected when interest rates go up.
In the United States, stocks have proven to offer the highest returns in the long run when compared to bonds and treasuries.
An increase in interest rates results to a decrease in bond prices and vice versa. This is particularly true for bonds that have a longer maturity period. Buyers would rather pay more for a new bond with a fixed rate than for an existing one with a fixed rate.
In the long term, earnings determine stock prices. In short term, stock prices are determined by investor sentiments to economic weather and interest rates.
A single bad day in the stock market is worse than a whole bad year for bonds.
Time for Some Investing Lessons