It's no secret that the market goes UP...the market, goes DOWN. That's the basics of Investing 101.
For many of us the shape of the market day to day has about as much influence on our lives as the time of the tides that day. But for investors - especially first time investors - it can be a rollercoaster of heart racing highs and stomach churning lows. Every movement is being carefully reviewed and if it turns down then investors with itchy feet jump out.
If you know the benefits of investing, how can you avoid the stress of putting your hard earned money into the market?
Financial planners and investors are quite clear on the subject. New investors should not make an investment unless they are going to let it sit at least 5 to 7 years - the longer the better.
Why?
Well, the economy DOES move up and down, but we have never seen it bottom out (and if it did - well, you'd have much bigger concerns than your investment).
By selecting a diversified portfolio, such as a mutual fund, you can usually base your prediction on past activity and you'll see that in any 7-15 year period the investor always came out with more than he put in.
How do you take advantage of that? When should you invest?
Well, if shares were being sold for $10 each and you had invested $100 you would have purchased 10 shares. Now, if that is your whole investment you would be very upset if the value went down to $5, wouldn't you? Now your stock is worth $50. What would you do? Sell before it goes lower and loose $50?
Using the 'Cost Averaging' technique:
Cost averaging means you continue to put the same amount of investment into the market regularly - preferably every month. Now if you did that you would have invested another $100. At $5 a share you would buy 20 shares. Right now you have invested $200 but only own $150 worth of shares.
What happens when the price goes up?
When the price goes back up (and it will) it may stop at $8 per share. Now what? Well, you invest your next $100 and buy 12 shares.
You now have 42 shares valued at $8 each. That totals $336. Your investment was $300 so you just made 12% off of your investment.
Combining the cost of averaging with the 10% recommended for us to set aside for savings or investment - what's stopping you from jumping in?
Lucy Vestirian is the webmaster for http://www.fyinvest.com which is the premier invest site on the Web. Visit http://www.fyinvest.com to learn about different investment ideas and strategies
article_text... Read More
article_text... Read More
article_text... Read More
article_text... Read More
article_text... Read More
article_text... Read More
article_text... Read More
You've been thinking that your financial life could probably be better, right? Maybe you think, "If I could just stick to a budget everything will be fine?", or how about "When I get that next raise or promotion, I'll have enough money to pay off my debts and save some money?" You may even be thinking,"I can do this on my own!"I hear these comments and more on a regular basis... Read More
What is "The Commodity of Kings""Power is simply "the ability to act... Read More
Before I had a lot of money, I was really quite happy," said Oprah Winfrey... Read More
Have you stopped to realize that although you go to school to learn about important subjects, no one teaches you how to manage your money? Money is an essential part of life in our pursuit of happiness, yet very rarely will a parent sit down and tech their child how to handle their money... Read More
Estimated Reading Time: 4 minutes -- Envision your life 10 or even 20 years from now... Read More
Compounding: The Ninth Wonder of the WorldBy Nicola Cairncross Compounding is often described as the ninth wonder of the world... Read More
"Ooooooh," you may say, "I could NEVER be good at marketing, I'm just not that sort of person... Read More