Are you new to investing money especially when it comes to saving for your retirement? If so in this article I am going to give three investing tips that will help you out along the way to become a better investor.
Invest In The Proper Places
The first tip to investing your money is putting it in the right place. A lot of people who save money will put it in bank CDs or money market accounts. The reason you don’t want to do this is because these types of accounts don’t earn high enough returns to justify saving for the long term.
On the other had I suggest saving your your money in an IRA or Roth IRA that invest the money into a mutual fund. With mutual funds you will see much higher returns and earnings. However once you have the money in the proper places it’s also vitally important that you don’t take the money out either. I once knew a guy who pulled money out of his retirement account to get IRS tax debt relief and it ended up costing him big with the tax penalties.
Dollar Cost Average Your Money
Next you need to dollar cost average your money when you invest it. For example if you had $5000 and you invested it all at one time and the going share price was $12 a share you would have only bought 417 shares.
However if you would have spread the money out over 5 years and in the first year you paid $12, year 2 paid $10, in year 3 paid $8, in year 4 paid $5, and year 5 paid $10, you would have average around $9 a share instead. This would of allowed you to buy 556 shares, which would have been 139 more shares.
Diversify Your Dollars
Finally, you have to diversify your money. This is the process of were you spread you money over several different funds instead of just investing it in just one fund. The reason this is better is because each fund will do different things.
For example, small cap funds are mainly invested in business that just getting started and are much more susceptible to risk. On the other hand you also have large cap companies which are very large stable companies and as a result are less risky.
When getting started investing, look to invest into several different funds that will spread your risk and allow you to stay safe but also allows you to take some risk which could help you earn those higher returns.
Related posts:
- Value Investing Tips
- Investing Tips and Solutions
- Basic Investing Tips
- Gold 101: Simple Tips For Investing
- Gold Investing: Basic Tips and Suggestions
« Improve Returns By Writing Covered Calls Ever Heard Of Spread Trading? »