Invest Wise By Knowing Where To Invest And Your Risk Tolerance
Mary Maseko
With investments, if you were going to purchase a new car, you would do quite a bit of research before making a final decision and a purchase. You would never consider purchasing a car that you had not fully looked over and taken for a test drive. Investing works much the same way.
With stock markets, learning about the stock market and investments takes a lot of time but it is time well spent. There are numerous books and websites on the topic, and you can even take college level courses on the topic - which is what stock brokers do. With access to the Internet, you can actually play the stock market - with fake money - to get a feel for how it works.
And as a potential investor, you should read anything you can get your hands on about investingbut start with the beginning investment books and websites first. Otherwise, you will quickly find that you are lost.
The risk tolerance
If you plan to retire in ten years, and you've not saved a single penny towards that end, you need to have a high risk tolerance - because you will need to do some aggressive - risky - investing in order to reach your financial goal.
Realize of course, that your need for a high risk tolerance or your need for a low risk tolerance really has no bearing on how you feel about risk. Again, there is a lot in determining your tolerance.
A good financial planner or stock broker should help you determine the level of risk that you are comfortable with, and help you choose your investments accordingly.
Getting started
Start with an interest bearing savings account. You may already have one. If you don't, you should. A savings account can be opened at the same bank that you do your checking at - or at any other bank. A savings account should pay 2 - 4% on the money that you have in the account.
Certificates of Deposit are sound investments with no risk. The interest rates on CD's are typically higher than those of savings accounts or Money Market Funds. Again this can being back a lot in invest and a good way to start out.
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