Learning How To Invest
By Jayme Hanson

Learning how to invest can be relatively painless and the rewards can be great if you understand the basics first. When you are first learning how to invest, you need to determine your investment goals, such as retirement, a college fund for the kids, a once in a life time trip, and so on. By establishing your goals, you can then determine whether you want to invest in long term or short term types of investments.

Learning how to invest will teach you about different investment strategies, rates of return and compounding interest. All of these items are important for your overall financial health.

Learning how to invest in short term investment strategies include:

- Savings Accounts: Most of us are familiar with a savings account that you open at your local bank. This type of account typically earns very small amounts of interest.

- Money Market Funds: This is a special type of mutual fund that invests in extremely short term bonds. A money market fund will pay a better interest rate than a savings account but not as much as a certificate of deposit.

- Certificate of Deposit (CD): You can usually obtain certificate of deposits at a local bank or other financial institution. The interest rate will be based on the duration or length of time that you keep the certificate

of deposit. Interest is paid until the certificate of deposit matures at which point you will receive the initial amount of you deposit plus any interest that has accumulated. Interest rates for certificate of deposits are usually about the same as short or intermediate term bonds.

Learning how to invest in long term investment strategies include:

- Bonds: Bonds are known as fixed income securities because of the amount of money or income the bond generate each year. Bonds are very similar to certificate of deposits except that the government or corporations issue bonds instead of banks.

- Stocks: Buying stocks is a way for individuals to own pieces of businesses. Owning a share of stock in a company represents a portion of that company based on how many stocks are offered for ownership. The value of the stock will rise and fall as the value of the company changes.

- Mutual Funds: With a mutual fund, investors will pool their money and buy bonds, stocks and anything else the fund manager decides would be a good investment. With a mutual fund you don’t manage your money instead your money is managed by a professional.

Whether you are in short term or long term strategies, do you due diligence before you sign up for any investment.