Stocks and Bonds 101
December 3, 2007
In order to increase the potential for your money to grow, you should have a clear goal in mind. This is especially important when contemplating the prospect of investing in stocks and bonds. With a goal in mind, it gives you something to work towards while deciding which stocks and or bonds you want to invest your money in.
Next, you will need to decide if you are looking to become a long-term investor or a short-term investor. Keep in mind as a rule investing in stocks requires a long-term commitment, as you will have to ride out the highs as well as the lows in order to receive a good return on the investment made.
For the short-term investor, you may want to consider CD’s. The interest rate for CD’s probably will not allow for a grand return, however, they are a safe investment. This is important for someone new to investing.
There is however, a way to maximize the potential return output is to stagger the investment. Meaning, if you have $25,000 to invest in CD’s you will invest in 5 CD’s. Investing $5,000 in each CD each will have a different time to maturity. Staggering, the maturity schedule of your CD’s will allow you to reap the benefit of your investments on a regular basis. To keep the returns of your invest coming in you should simply re-invest the monies to allow for a steady return on your investments. In addition, it is good to keep in mind that the longer it takes for your CD to mature you will also be able to take advantage of a slightly higher interest rate.
Now let us turn our attention to stocks. This type of investment is a long-term commitment that will entail the investor to possess a bit of know-how, in order to avoid very costly mistakes down the road.
Keep in mind that when investing in stocks, you are essentially providing a source of capital for a company in order to allow amble opportunity for growth.
Just to recap, stocks are a long term investment with the opportunity for a high rate of return, providing the investor does the research needed, in order to pick just the right stocks for his/her portfolio.
