Three Important Investing Tips For Inexperienced Investors

Investing your hard eared money can be a mine field. Every day we read and hear about people who had their life savings wiped out by scrupulous investors. When Bernie Maddoff made the headlines the world was outraged by how much money he stole from uninformed investors. You don’t want to be one of them and what you want to do is to tread carefully yet have enough trust in the right people to have your money work hard for you while its safe and secure.

If you want to invest then you will have to trust people. Its been said that investing is a team sport and you need to have experts do those things you don’t do well. Like doctors, lawyers and accountants you should be able to trust an experienced investor with your money. Even with the help of a professional you need to be careful. Here are 3 great tips to help you get the most of your investing while staying safe and secure.

1. Know the risk and the reward

All investments you make are “dictated” by the relationship between risk and reward. High risk investments usually have high rewards. Low risk investments usually have a lower return and the amount of risk you are comfortable with should dictate your investment strategy. If you have a professional dealing with your investments then you need to make sure that you know exactly what the risks are.

2. Commitment

One of the problems with investing in mutual funds is that you need to commit yourself for a set period of time. The time frames usually vary from 1 to 10 years and while this is not usually a big deal the problem comes in when you want to get your money out. Most funds charge an exit fee when you need to get your money out. Make sure you know exactly what’s involved if you need to get your money out.

3. Fees and charges

Most inexperienced investors burn their fingers with fees and charges. Like any other professional, investors who take care of your investments will charge you a fee. These fees are usually built into the investment package and can be very high. I’ve seen funds that charge as much as 5% which is a lot. It’s important that you know exactly what fees and charges are involved as you do not want to get any nasty surprises when you get your end-of-year statement.

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