Irrespective of your income and age, you can always learn how to invest your hard-earned dollars efficiently to ensure significant ROI (return on investment). With rapid disappearance of conventional defined-benefit pension plans, people have become more conscious about their financial condition after retirement and thus they are getting more and more inclined towards saving and investment during the working years. Therefore, as a beginner in investment, gathering enough knowledge will undoubtedly help you to meet your financial goals in due course.
Here are some useful tips for the greenhorn investors.
• Add up and segregate your assets – First of all, you need to add up investable assets and then distribute them into two categories – short term and long term. Money that you want to get back with good return within next 5 years should belong to short term category, while money that you can leave invested for 5 years or more should be considered for long term category. Money in the former category should always be invested in safe financial vehicles such as savings account, certificates of deposit or money market funds; you must not take any risk with that money. Nevertheless, you can take risk with the money in latter category; it can be invested in stock market or bonds.
• Contact your employer – You can contact your company’s accounting department and ask for investment opportunities offered by the company. Being a worker for a private employer you may get access to a 401k plan, while as a public agency staff you can have access to 403b plan. Some employers fund an employee stock purchase plan to the employees apart from mentioned retirement plans. An employee stock purchase plan allows the employee to accumulate shares by means of payroll deductions.
• Put enough in retirement plans – To get advantage of employer-based retirement plans, you must fill up the enrollment application. Make sure you put enough into your 403b or 401k plan to get full matching grant from your employer. Not doing this denotes you’re losing free money on the table.
• Think about mutual funds – You can consider mutual funds for your investment tool for long term. They are comparatively less risky if compared to stock market. To start off in this market, you need to understand all pros and cons associated with this. Also you should know the fees and expenses, and select one that charges minimum. Accordingly to a survey published on Motley Fool website, some mutual funds charge as low as only .18%, so you can consider this as a benchmark.
Points to note
Consider dollar-cost averaging if investing into mutual funds. Dollar-cost averaging means you invest same amount of money every month irrespective of the market trends. It helps you accumulate more number of shares while the market falls and vice versa. Discussed above are some basic, but very useful tips that you can surely observe to invest successfully, effectively and professionally and guarantee robust personal finance during the years after retirement. However, you can always consult an investment Guru to show you the right path to ensure maximum ROI.
Alan Starc is a very knowledgeable investment advisor. From stock market to mutual funds, from forex market to commodity market – he provides his clients with market-friendly investment suggestions. Please read more trendy topics here @ www.alpari.co.uk