by Dave Steffensmeier

Created on: May 13, 2007   Last Updated: May 16, 2007

Wondering if you should buy stocks, bonds, and/or mutual funds? A balance portfolio is important to reduce the risk of losing everything. Stocks are generally great over the long term. It's a simple philosophy of buying low and selling high. However, people get nervous when there stock goes down right away. Stocks can be very rewarding for patient people between 20-40. You shouldn't put all your eggs in one basket. Buy several stocks and set yourself a goal when to sell. Perhaps sell at a 25% profit if within a year.

Mutual funds are great if you do not want to do the research. A mutual fund manager will do all the work for you and charge you a smaller fee then buying a stock. You will usually see more of a consistent profit or loss over the short term opposed to an individual stock price changing daily. Mutual funds can work great in a 401K. There are now funds with retirement year to dates. The purpose of this fund is to have a mutual fund manager help you be where you want to be at a certain retirement year.

Bonds work great for someone conservative or closer to retirement age. You usually know what the return on investment will be. The risk is less then a stock or a mutual fund. However, the return on investment is much lower over the long term. Bonds can work great if you are looking to liquidate cash in the near future. This will help you make a return on investment until you are ready to make a major purchase such as a house or a car.

It all comes down to if you are willing to do your own research or willing to pay to have someone else invest for you. Please keep in mind when doing your own research be careful about getting free advice. Anyone can claim to be an expert about a certain investment. You also have to be careful when getting advise from a financial adviser. Financial advisor's get paid by commission. You really have to make sure they have a vested interest in you being successful. Some advisor's only care about making the most transactions to get the maximum commissions from their customers. Do your research by checking the Better Business Bureau, New York Stock Exchange, and Dun and Bradstreet when researching a company to make an investment or a company that makes investments for you. No matter what you decided take advantage in investing in a 401K and/or IRA account. You can't beat the tax deductions.

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