by Jennifer Fidalgo

Created on: January 30, 2010

Investing money is achievable to all individuals. Whether you have a little bit of money to invest or a lot you can start saving for the future and profiting. The steps to begin investing money are practical ones. These steps include paying off your high interest credit cards, establish an emergency fund for the unexpected, using your employer’s 401K, opening an IRA and investing in low risk stocks.

Pay Off Your High Interest Credit Card

Credit cards will eat away at your savings. When you pay for an item on a credit card you end up paying significantly more in interest than you would have if you had just paid for the item upfront. The exception to this rule are the smart people that pay off their whole balance at the end of the month. If you live beyond your means and are buying items you cannot afford eventually your cards will become too high. You will be using money that could have been saved and invested just to pay the minimum in some cases. By paying only the minimum, not only is your hard earned money going to pay off mostly the interest on the credit card, but you end up paying interest on top of the interest you have! Obviously, times are tough and some people may not be able to put a lot away each month to pay off their debt. The best solution is to pay a little bit more than the minimum and stop using the credit card. Having one credit card for emergencies is fine but you should not be shopping with them, paying to get your nails done or using them to buy meals at restaurants. Sure, it is enticing to use them these cards can get you into trouble. If you need help paying off your high interest debt because you are unemployed or racked up a high amount of minimum charges then there are is help available. There are credit counseling services and credit consolidation businesses that may be able to help.

Establish An Emergency Fund

Once your high interest credit cards are paid off, you are ready to set some money away for an emergency fund. The amount does not have to be much. If you can only put $20 away each month then that’s where you can start. By cutting expenses like buying a latte each morning or paying for lunches every afternoon, even more money can be put away. Treat each dollar as an investment and you will think more carefully about your purchases.

Low Risk Investments

If you have a 401K through an employer then this should be your first investment. The money invested into these accounts are tax free. If your employer offers to match the contributions that are made into your 401K  it is wise to take advantage of this. Free money will be made in return.

Also consider opening an IRA. There are two types available. The traditional type of IRA is similar to a 401K and is tax free. The second kind of IRA is a Roth IRA. This is the better investment because you can withdraw earnings without a penalty fee and when you retire you will enjoy a nice tax break.

Opening a mutual fund is a way to invest in the stock market without risking your money. The reason for this is that these accounts are highly diversified. If one of the stocks in your portfolio goes down the loss will hardly be felt.

Invest into a company’s stock if it has been profitable and stable. Don’t start with a big investment and make sure this is money that you do not need.

Learn more about this author, Jennifer Fidalgo.
Click here to send this author comments or questions.