How To Investing Your Money

Investing


In this article, I'm going to show you how to invest. But for better understanding, I'm going to write this article base on someone name Bob.

Read the previous article Why Investing - Investing Tips For Beginners

Meet Bob. Bob just got his first paycheck from his first job out of college. He's very excited. Bob has decided to invest some of that money, after reading our article Why Investing - Investing Tips For Beginners but doesn't know where to start.

What should he do?

Well, when choosing what to put into an investment account, whether it's a specialized retirement account, like an IRA, your run-of-the-mill account, Bob has 3 major ways to "fill it"

Ways To Fill An Investment Account


1. Fill It Himself

He could do it himself and use an online broker to buy individual stocks, bonds, and funds. 


2. Professional Investors

Bob could give money to professional investors. Some, like private equity and hedge funds, are only available to high net-worth investors. Others, like mutual funds, are available to everyone, In either case, they both employ very smart people who have been trained to purchase a lot of shares in a few companies, like Apple or Google, that they believe are going to do better than the overall stock market.


3. Robo-Advisors

Bob could give his money to robo-advisor. Unlike the professional investors, we just described, robo-advisor believe it's impossible to beat the stocks market in the run-long. 

That's why instead they choose to just match it, by buying a bunch of exchange-traded funds, or ETFs, (Exchange Traded Funds) which are each made up of small pieces of thousands of different stocks or bonds.

This enormous diversity allows them to track the market and keeps them from putting too much of your eggs into any one basket, which dramatically lowers your investment risk through diversification.

In addition, using your age and risk tolerance, robo-advisors can also personalize a portfolio to your situation. That means as you age and need more security, your portfolio will automatically shift from high-risk, high return investment like stocks, to low risk, low return investments, like bonds

Seem Robo-advisors pretty cool right? But are they really better than mutual funds?

Well, as it turns out, yes. Robo-advisors cost less without sacrificing performance, and the data agree: Less than 1% of all mutual fund managers can consistently beat the market after fees in the run-long. And these are the professionals!

Amateur do-it-yourself investors are even less likely to succeed. So, for those ready to take the plunge, an account with a robo-advisor is easy to set up, has reasonable account minimums, and most importantly, no investing knowledge is required to use one.

Finally, although we know Bob is very excited to start investing, we recommend he follow 

These 3 Simple Guideline Before Getting Started.
Don't invest any money you'll need in the next 5 years.

Don't start investing until you've established your financial foundation. This means being free of high-interest debt, being adequately insured, and having at least six months of living expenses saved up.
Automatically invest a fixed percentage of your paycheck per month, and then forget about it. This ensures you invest consistently remove emotion from the equation, no matter what the market is doing.


Hopefully you and Bob now better understand how to actually invest

Author:

Hi, i am Micheal, the guy behind Roadtosuccesse. I share tips and tricks to help take a business to the next level, show which systems I personally endorse and use, share what I learn as a student of the game, and help people with personal development so that they can reach their full potential.

Facebook Comment