Editor’s Note: This guest post was written by Go Banking Rates
Have you been thinking about getting in on the investing game, but don’t know exactly what investments you want to make? You may receive tips on various investment options, but which should you choose?
Some experts agree that learning to invest requires that you be willing to dabble in a bit of everything to create a diverse portfolio. If you have yet to hear this concept then let’s take a closer look into why investing in your future requires diversity.
Any Investment Could Lose Money
Whether you’re investing in the stock market, or trying to play it safe with Treasury bills, you run the risk of losing money. Of course, the threat of loss will lessen as the level of risk lessens, but any time you allow your money to leave your hands for an extended period of time, you run the risk of losing it (ask the millions of people who lost their 401(k) accounts or lost money after their banks closed).
It is for this reason that financial experts suggest creating a diverse investment portfolio. But what should you add to your investment portfolio? Different investment managers will definitely give you different advice, but here are a few options to consider:
- Stocks: Stocks are known as securities that are issued by a business and represent an ownership share in that business. In other words, you own a piece of the business and are able to receive a dividend as a result.
- Bonds: Bonds are similar to stocks in that they are securities issued by a business; however, the security represents a debt owed by the business. So instead of owning a piece of the business, you are issuing a loan that will grow in interest and be paid back to you at the date of maturity. Bonds are typically safer investments than stocks.
- Mutual Funds: Investing in a mutual fund allows you to invest in a number of financial securities like stocks, bonds and money market instruments at one time.
- ETFs: Similar to mutual funds, ETFs allow you to invest in multiple securities. However, the difference is that your shares can be traded between shareholders through the stock exchange, meaning you can buy and sell ETF shares throughout the investing day.
You could also consider investing in real estate, high-yield bonds (also known as high-yield debts) and even placing your money in money market accounts and buying CDs. The more ways you choose to invest your money, the greater your likelihood of seeing it grow.
Don’t Forget about International Investments
Some investors have found that getting involved in international funds is also a good way to further diversify their portfolios.In the past, taking this route may have been overlooked by some investors because the concept seems to foreign and unfamiliar. But thanks to the Internet and easy online investment tools, investors are finding that getting into the international market offers great opportunities for growth.Of course, there are risks involved in foreign markets since you’ll be involved with non-U.S. securities, so it’s good to study the country you’re thinking of investing in before getting started. But after opening an international brokerage account, adding diversity to your portfolio should be a snap.Investing is a great way to grow your money as long as you work with investment managers you can trust, or study hard to manage your own investments. But always keep in mind that along your journey, diversification is the closest guarantee that you’ll not only keep your money, but help it grow.
This guest post was written by Go Banking Rates, bringing you the best interest rates on financial services nationwide, as well as informative content and helpful tools. Subscribe to Go Banking Rates RSS
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