Whether you’re saving for retirement or college, hoping to grow your wealth or simply want to make your money work harder for you, sound investing is all about setting goals, taking informed actions and balancing risks. This Investing 101 article provides some basic information about the types of investments available and how they might help you pursue your financial goals.
You can invest in a variety of vehicles including stocks, bonds and mutual funds. Stocks and bonds are two types of securities that you can purchase individually or through investment funds, which are professionally managed collections of investments (generally stocks and bonds). A bond is essentially a loan to a corporation, city, organization or government. In exchange for lending your money, the borrower promises to pay you interest on your investment over a certain period of time, called the term.
Investing 101: Essential Knowledge for New Investors
There are several different types of bonds, each with its own risks and rewards. Choosing which ones to purchase depends on your financial goals, your current spending and savings, and how comfortable you are with short-term market fluctuations. The goal of investing is to build wealth over time and outpace inflation with reinvestment of earnings.
It’s important to periodically review your investment account statements, which provide detailed information on your investment performance, fees and holdings. This can help you determine whether your investments are still aligned with your goals and if any changes need to be made. Ideally, you should be able to reach your goals without having to sell any investments, but for some longer-term goals, selling assets or shifting strategies may become necessary.