Before you start making an investment plan it’s important for you to know the basic understanding of different investments. For everyone, the first investment would be the toughest in their lifetime.
The investment goals of individuals might vary from one another. Some people might wish to work hard on their earning for few years, spend less and then wish to invest the difference amount so that by the time they retire they would be getting enough interests from their investments. Here you need not to sell your investments to spend money. When careful estate planning is done the same can be passed to the other generations as well. It’s the right attitude which should be followed by everyone.
Where does the investment need to be
Depending on the individual’s situations most of the financial advisors would recommend you to invest in stocks and bonds. When you choose stocks, they would represent the partial ownership in a company and bonds are like “I owe you”, whereas mutual funds might involve bonds or stocks or both for you. People might even wish to invest in real estate where you can own a place.
Should you pay down debt or invest?
When you are unable to make minimum payments for your debts then you should never look for investments. If you have an additional amount after paying the regular debts then you may:
• Pay down debt: when the interest rates are more than 10% then it’s always a better option to pay off the debt if you have enough money.
• To buy investments: if the interest rates which you are paying are very low then you can use all your extra money in buying investments like stocks and bonds.
• Can pay debts and invest: you should keep in mind that you should use more than 75% of your savings amount in only one investment. If you are not sure then you can even consult a financial advisor who would provide you with the right guidance on how you can go on with your investments and deal with debts.
Strategies for lifetime investments:
1. Investing in mutual funds with a margin of safety: the no-load low-cost index mutual funds are the right investment choice.
2. Buying and holding carefully chosen bonds: when you buy on regular intervals the total stock market index fund you would definitely have satisfactory results.
Before you choose any particular investment it’s important for you to do some market research and know in detail about it.