The Basics of Investing – How to Start

You don’t have to be rich in order to begin investing your money. In fact, anyone that has a little bit of money can do so with some time spent in research. Investing is simply an avenue to grow your money over time. It works by you putting up front a certain amount of money, let’s say in the stock market, and over time as that stock increases in value, so does your money.

Here are a few great ways to begin investing if you are a beginner to the topic:

1. Purchase a Dividend Reinvestment Plan (DRIP) or a Direct Stock Purchase Plan (DSP). All you should need to make an investment in these is $50, which is enough to get your feet in the water and see what happens. You won’t get rich off small investments, but it gives you a taste of the whole investment arena. You can do some research into these plans and either make a one-time investment or opt for a monthly amount. If you’re seeking to build a stock portfolio, the latter will be your best bet.

2. Get familiar with index funds. Reports show that mutual index funds tend to have a good rate on return even through times of recession. There are a variety of index funds to choose from, so you either want to do your research or have a finance professional help you out. It’s best to make investments regularly for years and years. Many people open an Individual Retirement Arrangement (IRA) in order to prepare them for retirement. You do not have to have a lot of money to begin your IRA.

3. Invest in a CD account. You can obtain a certificate of deposit (CD) at your local bank and grow your money via such over time. How this works is that you purchase a CD for the amount that you’d like, say $1000, for a certain amount of time. During that time the bank holds your money in that account and you gain interest on the money. The longer the term, the higher the interest rate.

These are just a few ways for you to get started with the basics of investing. It is in your best interest to take your time and learn about the principles of good investing so that you do not lose out on money. If you don’t want to spend the time or effort doing the research yourself, there are plenty of finance professionals willing to start your investment portfolio today. You can sit down with them, discuss your financial picture and goals, and he or she can put together a great package for you to consider. Investing is a wise choice, as anytime you can grow your money without doing a thing is just plain wisdom.

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