Have you been thinking about investing? There are TONS of ways you can invest in your future. Really, every time you put forth your own money for investing, you’re taking a risk. You are taking a risk in gaining more money or losing money. Here is an intro to the ups and downs of investing.

 

Types of investment risk

  1. Market risk - There are several times of market risk. Everything from equity risk to currency risk.
  2. Liquidity risk - Sometimes you aren’t able to sell your investment at a fair price.
  3. Credit risk - When you’re investing money there is always a credit risk. You must be willing to understand the credit risk of a bond.
  4. Inflation risk - There is always an inflation risk whenever you deal with investment.

 

When it comes to investing, always look at your existing investments. Know your risks and know whether or not you’re comfortable with these types of risks.

 

Intro to Stocks

Almost everyone has heard of stocks before. You can buy shares of a company’s stocks. And with buying those stocks, this means will own a small part of that company. Of course, there are all kinds of stocks out there, everything from large caps to penny stocks.

 

  • Intro to Penny Stocks - For some, this may be the first time you’re hearing about penny stocks. It’s important to know about the ins-and-outs of penny stocks, so you do it right the first time. Investing is always scary, but this is a great way to get started.
  • More Than a Penny - One thing to know about penny stocks is that they rarely only cost one penny. However, it is way cheaper to go the penny stock way because it’s under $5. It’s important to know that while penny stocks are cheaper, it can be just as wild as regular investing. Each investor looks at penny stocks in a different way.
  • Since Penny Stocks can be so intricate, check out this guide to Penny Stock Trading 101: How to Trade Penny Stocks.

 

Investment Funds

A deeper type of investment are investment funds. Mutual funds, exchange traded funds, a pool money of investors and so much more. When it comes to investment funds, you really need to do your research and know the ins and outs of the investment you’re making.

 

Bonds

Another form of investment you can make with your money is with bonds. According to Finra.org “a bond is a loan an investor makes to an organization in exchange for interest payments over a specified term plus repayment of principal at the bond’s maturity date. “

 

Banking options

You know that a lot of people open checking and savings accounts. It’s important to know that there are companies out there want to help you grow your investments with the help of a checking and savings account.

 

Other types of investing

  • Annuities
  • Saving for college
  • Retirement
  • Life insurance

 

There are dozens of ways you can invest! It’s important to know everything you can about the type of investment you’re about to make.

Reasons People Invest

Now that you know all the ups and downs of investing, it’s important to know why people invest their money. You can work hard and still not see a huge financial return. Instead, people turn to investing to turn their hard earned money into wealth.

 

There are many reasons people invest their money. If you’re looking for a reason to invest, here are several reasons.

  • Watch your money grow, grow, grow! Whether you choose stocks, bonds, or a 401k, all of these options can help you to build your wealth.
  • Get a higher rate of return. Investing is one of the only places you can see a high rate of return on your money. While it does come with some risks, the good usually outweighs the bad.
  • Invest pre-tax. When you’re investing there are major perks like starting a pre-tax 401k. This means you can avoid being taxed on this money! The only downside is you can’t get to the money right away, you need to allow it to grow.
  • Be a part of something bigger. Investing allows you to see potential in other people or businesses.
  • Business owners use investing as a way to build and expand their business.
  • Help you reach those financial goals. Every person has financial goals. Investing is a great way to reach those financial goals even faster!

 

Before you invest, this is a great run down of the ups and downs of investing. While there are some major risks involved with investing, it’s important to know that there can be a positive outcome of risking your money.

 

Investing is a great way to grow your money, even when it seems impossible. Have you ever invested before? If you haven’t, hopefully these tips help you understand everything from penny stocks to 401k’s, just a little more.

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