1 of 13

Write now Article Tools

Starting an investment portfolio can be intimidating. There are dozens of different ways to save your money, and sorting out what is the best way to invest can be confusing. This article will focus on a few basic tips for the beginning investor. I will provide some simple advice that should give you a base of knowledge that can be used to decide where to put your hard earned money.

The first steps in making any investment is to sit down and carefully determine how much money you have to spend, and how much risk you are willing to take. Both of these factors will have a large effect on your investment decisions. Most investors who are young and just starting out are not going to have a lot of extra money. In addition, I suggest that a young investor, who is just getting started, not take too many chances with your money. As you become more experienced and you have more tolerance for loss, you can make your investments riskier. Let's take a look at some specific investment modalities.

Money Markets and Certificates of Deposit (CDs)

Money Markets are, in some sense, just glorified bank accounts. They will not make you much in return, but they are relatively safe. They are also easy to get you money out of on short notice if your financial situation requires you to get your investment back out. Money Markets can be found at most banks and some other investment companies that also deal in mutual funds. Certificates of Deposit very low risk investments. They are investments that are purchased at a bank for a specific time period at a fixed interest rate. For example, you buy a CD for twelve months at 8%, which means your money is locked in to the CD for twelve months and you will earn an %8 return at the end. They are so low risk however, that they are actually insured by the Federal Government.

Equities

Equities is a broad term that primarily includes stocks and bonds. These are very popular and can offer a great balance between risk and return, although the range here is quite broad.

Buying individual stocks can be quite rewarding, but it carries tremendous risk. Many investors have lost significant amounts of money buying shares of companies that have lost value. For a young investor, I recommend only buying individual stocks if you have a fair amount of money to invest and would not be broke if you lost some or all of your investment.

Many young investors choose to buy Mutual Funds, which are "pools" of investors who all combine their money to buy a large number of

• 1
• 2
• next page >>

Add your voice

Know something about Tips for young investors?
We want to hear your view. Write now!