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Wednesday, March 12, 2014

6 investment tips for beginners

Investment basics
The time value of money is a key investing variable

Investing your money wisely can make a significant difference in your future well being. No matter how old you are now or what your current economic situation, making solid investment decisions can be a real turning point in your life. That's why you should carefully consider the following 6 investment tips for beginners.

1. Begin investing right away

Some people think that they are too young or too old to start investing. Others want to put it off until they have a higher salary or their business starts doing better. The fact is, the best time to start investing was 5 or 10 years ago. The next best time is right now. If you don't have a lot to invest, you can start small. The point is, it's never too early or too late to begin an activity that can make your future so much brighter.

2. Identify your goals

Not everyone has the same objectives for investing. These will depend on your current situation, the amount of money you can afford to invest and your own personality. Are you a younger person looking to ensure that you will be comfortable when you're ready to retire? Are you someone in mid-career who wants to pursue an aggressive investment strategy? Take some time to figure out what you want and then you can seek the best type of investing to accomplish this.

3. Diversify your investments

No matter what your overall investment strategy is going to be, it's never a good idea to put everything into one stock, fund or industry. Diversity gives you some leeway in case a certain sector of the economy does poorly. Invest in many different avenues. Commodities, 401ks, real estate and stocks are some of the popular areas to invest in. Nolo.com suggests to diversify with bonds and international investments as well.

4. Acquire the proper tools

Technology has made it easier than ever for average people to become savvy investors. Take the time to acquire some tools that can help you invest more efficiently. Make sure you learn how to use them before you do any trading. For example, if you want to begin investing in stocks, it may be beneficial to buy some stock trading software. Toptenreviews.com has some day trading reviews you can look at to help you if you are unsure on how to get involved. These types of tools can make it faster and easier to trade once you get started.

5. Do your research before investing

Don't make the mistake of investing in real estate, companies or markets that you know nothing about, perhaps because a friend has given you a tip that's a "sure thing." Always do your research and learn about the fundamentals of a company or property. When it comes to types of investing, don't jump into markets such as futures or Forex without understanding how they operate.

6. Decide how much risk you're comfortable with

Not everyone has the same tolerance for risk. You must consider both your own personality and what you can realistically afford to risk. When starting out, it's usually best to begin with investments that are lower risk. Later you can test the waters with more speculative investments. Overall, however, you should decide what your comfort level is and decide if you are basically a risk taker or a risk adverse investor.

Take the time now to begin preparing for your future. Investing now will pay off in the long run. Make smart decisions and research which investments you want to go after. Do not put all of your money in one area, and learn how to be smart with investments to protect your retirement and future.

About the author: Chris writes for his blog The Financial Park about being smart with money and other debt advice. He is an avid golfer and sports fanatic. You can follow him on Twitter @ChrisLindsey23

Image license: Nazir Amin, CC BY-S.A. 2.0