Personal finance involves saving money and budgeting. It also includes investment management, specifically stock investing. If you really want to make money and get ahead realize that stock investing is a key ingredient of personal finance. Here we bring you up to speed on stock investing vs. Saving money in the bank. Then we suggest the best ways to invest in stocks if you lack experience.
Saving money for a rainy day is an important part of personal finance. We all need a cash reserve to cover emergencies and as a cushion to make sure we can pay the bills. It is a nice secure feeling to have money in the bank, even if it earns meager interest rates. But how do you really make money to get ahead?
Now this is very important piece of this particular issue. Just saving money is not enough. At 3% interest it takes twenty-four years to double your money. At 10% it doubles in 7 years. How can an average person make 10% a year? You guessed it ? Stock investing. OVER THE LONG TERM for the past fifty to eigthy years, stocks have returned ON AVERAGE about 10% a year vs. About 3% for safe investments like money in the bank.
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Once you have your head above water and can pay your bills with cash left over, investment management is the area of personal finance that determines whether you get ahead or not. Stock investing is your growth engine. Finally, how does the average person invest in stocks without financial experience?
If you have a 401k or similar plan at work, this is the best place to start stock investing. Start small if you?re not comfortable at first, but invest some of your contributions in general diversified stock funds. By doing this you?re invested in a long list of stocks. If other investors make money in stocks, you should too. Remember, over the long term stocks have returned about 10% a year vs. 3% for the safest investments like money in the bank.
If you do not have a retirement plan at work to invest in, you can invest in stock funds (stock mutual funds) on your own or through an investment representative or financial planner.
If you want to do it yourself and avoid sales charges and other fees call a major no-load fund family like Fidelity or Vanguard. If you want professional help call a financial professional.
Either way, get your personal finance show on the road and make money to get ahead by stock investing. Eventually you will want to add bond funds and money market funds to the mix. But remember, stocks are your growth engine. Invest a portion of your investment assets there to at least get your investment management headed in the right direction.
Stock investments don?t carry guarantees like saving money in the bank does. There will always be risk and bumps in the road. Think years down the road when you invest in stocks and do not let temporary setbacks upset you.
How can you lower the risks of investing in stocks? Get yourself up to speed. Do your homework and learn how to invest.
A retired financial planner, James Leitz has an MBA (finance) and thirty-five years of investing experience. For twenty years he advised individual investors, working directly with them helping them to reach their financial goals.
Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com
Source: http://m-investments.com/stock-investing-vs-just-saving-money/
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