Investment Basics
|
| Saving and Investing Wisely
The first step in investing is to secure a strong financial foundation. Start with these four basic steps:
- Create a "rainy day" reserve: Set aside enough cash to get you through an unexpected period of illness or unemployment--three to six months' worth of living expenses is generally recommended. Because you may need to use these funds unexpectedly, you'll generally want to put the cash in a low-risk, liquid investment, such as a money market account or mutual fund.
- Pay off your debts: It may make more sense to pay off high-interest-rate debt (for example, credit card debt) before making investments that may have a lower or more uncertain return.
| More Details
|
| Building on Your Foundation
Setting goals is an important part of financial planning. Before you invest your money, you should spend some time considering and setting your personal goals. For example, do you want to retire early? Would you like to start your own business soon? Do you need to pay for a child's college education? Would you like to buy or build a new house? In addition to these, there are several other considerations that can help you and your financial professional develop an appropriate plan.
| More Details
|
| Types of Investments: Stocks
When you buy a company's stock, you're purchasing a share of ownership in that business. You become one of the company's stockholders or shareholders. Your percentage of ownership in a company also represents your share of the risks taken and profits generated by the company. If the company does well, your share of its earnings will be proportionate to how much of the company' s stock you own. The flip side, of course, is that your share of any loss will be similarly proportionate to your percentage of ownership.
| More Details
|
| Types of Investments: Bonds
When you buy a bond, you're basically buying an IOU. Bonds, sometimes called fixed-income securities, are essentially loans to a corporation or governmental body. The borrower (the bond issuer) typically promises to pay the lender, or bondholder, regular interest payments until a certain date. At that point, the bond is said to have matured. When it reaches that maturity date, the full amount of the loan (the principal or face value) must be repaid.
| More Details
|
| Types of Investments: Cash
In daily life, cash is all around you, as currency, bank balances, negotiable money orders, and checks. However, in investing, "cash" is also used to refer to so-called cash equivalents: investments that are considered safe and can be converted to cash quickly. Common cash equivalents include savings accounts, money market deposit accounts, money market funds, certificates of deposit, guaranteed investment contracts (GICs), government savings bonds, U.S. Treasury bills, Eurodollar certificates of deposit, commercial paper, and face amount certificates.
| More Details
|
| Investing Through Mutual Funds and ETFs
You can invest in all three major asset classes through mutual funds, which pool your money with that of other investors. Each fund's manager selects specific securities to buy based on a stated investment strategy.
| More Details
|
| Asset Allocation
The combination of investments you choose can be as important as your specific investments. The mix of various asset classes, such as stocks, bonds, and cash equivalents, account for most of the ups and downs of a portfolio's returns.
| More Details
|
|
| This is a publication of Forefield, Inc., which is not affiliated with WFG Investments, Inc.
Copyright 2007-2010 Forefield Inc. All rights reserved.
Our Approach Asset Allocation Market Volatility
|
|
