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Best Investments For Beginners

It is imperative to have a healthy portfolio before you retire. However, it may not look as healthy as it should due to a falling economy and downsizing. As a result, many individuals have had to make concessions with their 401(k) plans and pension plans.
 
Who knows what Social Security will look like a few years or even one year from now. 
 
However, one thing you can control is how much debt you have retiring. There are many tips you can use to minimize and even eliminate debt – even before you retire. 
  • Consolidate Debt
By consolidating debt, you eliminate multiple payments and reduce the accumulation of multiple interest rates. However, make sure that you shop around before consolidating credit card debt from one card to another. The terms and agreements are almost always in fine print, and you need to know what the penalties, fees, surcharges, and time frame are before signing on the dotted line.
 
By consolidating debt, you now have the opportunity for one low monthly payment and one interest rate. This will open up the opportunity for you to pay off your credit card debt faster and eventually become credit-card-free.
  • Eliminate Future Debt
The only sure-fire way to eliminate future debt is to live within your means. If you purchase something and use the thought process of figuring out how to pay for it later, you are already automatically in the danger zone.
 
Eliminating future debt is achieved by not creating it. Take a class on how to budget or attend a budget workshop. Seek the expertise of a financial planner. Do not leave your finances to chance. By learning how to create and stick to a budget, you can guarantee yourself being free of future debt.
  • Refinance, Home Equity Lines of Credit, Reverse Mortgages
Some many finance-related workshops and seminars are free, and it would be a wise choice indeed to attend as many of them as you can. This will help you learn about whether it is in your best financial interest to refinance, purchase a home equity line of credit or not, and even the do’s and don’ts of a reverse mortgage.
 
As with everything else, an informed consumer is a wise consumer. When it comes to your money matters, seeking wise counsel is the best choice to make.
 
Find estate planners, eldercare attorneys, and other legal professionals who are willing to give you a free one-hour consultation. Gather as much information as you can from these free one-hour sessions before consulting a financial advisor.
 
Reducing your debt before retiring and learning how not to recreate it are two sure-fire ways to enjoy retirement more with fewer financial woes.

Creating an Investment Plan 

Before you invest, it’s important to make a plan of action to know what you’re doing and where you stand. Investing is important if you want to retire someday in the future. Even if you earn a limited income, you can save for your future.
 
Despite the volatile stock market, most people have recovered their losses and then some. Remember investing is a long-term plan.
 
Determine Where You Are Today 
 
It’s very important to check your current financial status by writing all your assets, income, and debt—separate debt into good debt, like student loans and mortgages, and bad debt like credit cards. You can easily use a spreadsheet on Excel or use one of the free documents from Google Docs that are available. 
 
Set Goals for Where You Want to Be
 
When you know where you are, you can finally set some goals for where you want to be. Have various goals for 5, 10, 15, and 20 years or more, depending on the age you plan to retire. Don’t assume you have to retire at 65 – some people, if they manage their money well, can retire much sooner. Others prefer to retire later at 70. It’s up to you to set your goals and plan for them.
 
Pay Down Consumer Debt 
 
One of the most important things you can do for your future is to pay down consumer debt. Consumer debt consists of personal loans and credit card debt with a very high interest – usually more than 10 percent and sometimes approaching 40 percent. This type of debt is not good to have, and if you think about it, you’re earning whatever interest rate they’re charging by paying it off.
 
Determine Your Risk Tolerance Level
 
Some people do not feel sick when they invest money that they might lose. Other people cannot stomach the idea at all. If you are risk-averse, then you should choose safer investments even though you’ll get a lower return. If you are okay with the risk of losing everything, then you have a high tolerance and can invest in more risky investments. With these, you could earn 11 percent or more on your money.
 
Choose an Investment Strategy Based on Your Risk Tolerance
 
Now that you have that information, you can start creating an investment plan. If you have a high tolerance to risk, you can invest mostly in stocks, and if you have low tolerance, you will invest mostly in bonds. If you’re in the middle someplace, you may want to choose a mutual fund to invest in. If you have money to burn, you may decide to try alternative investments such as options or real estate.
 
Based on Goals and Risk Tolerance, Determine How much Savings You Need Each Month.
 
Using the estimated figures supplied to you by the investing entity you choose to work with, determine how much you need to invest in each area each month to reach your short-term and long-term goals. For example, you may need to build up your liquid savings or catch up on your Roth IRA before buying a mutual fund. Determine all of that, and then work toward your goals each month. 
 
Monitor Your Investment Plan Regularly 
 
Check on your investments periodically to find out if you need to catch up or if you’re ahead of your goals. For example, if you check after five years, you may see that you filled your need for liquid cash and paid off all your consumer credit. Now you can invest that money into stocks, bonds, mutual funds, or a more risky enterprise based on your risk-averse level.
 
Relax
 
Now that you’re on your way to investing, you can sit back and relax. You’re investing based on your tolerance for risk, and the disposable money you have available to you each month, so you should be able to live your life and only check in on your investments occasionally. Daily checking can cause stress and anxiety and not give you a real picture of your assets anyway.
 
Creating an investment plan is a good idea for everyone. Most people can start very young, investing money even in high school with their first job. However, it’s important to save at least about 25 percent of your income from day one. If you can do that, you’ll never have to worry about your retirement years.

Finding the Right Brokerage Company for You

The thing you need to do when you decide to invest is to choose a broker. There are two types of brokerage companies you can choose from full service or a discount broker.
Let’s go over the two types.
  • 1. Full-service broker – If you go with this option, you’ll be assigned one person called a broker to help you with your purchases. This person can deal in stocks, bonds, and other investments. They will make recommendations to you based on your risk aversion and additional information that you provide. They will also send you reports as needed and do a lot of other personal things. In exchange for this personal, one-on-one service, you’ll pay a higher commission and typically require a higher amount to invest.
  • 2. Discount brokerage – This is for people who want to do it themselves. However, you have available all the research and direct the brokerage firm to invest as you wish. They do not give advice and execute the deals you want to make. Most of the trading will take place online, and you’ll sign in to your account and do the trades yourself electronically. This is a lot less expensive but requires that you pay more attention to your accounts and do more research on your own – which is not a bad thing.
 
Do It Yourself versus Hiring a Broker
 
If you are working with limited funds, your best bet is to go for the do-it-yourself model. But, if you have more money to spend and not enough time to research, a full-service brokerage might be for you.
 
However, if you plan to buy bonds and mutual funds, you can do it yourself very easily. But, first, you have to choose the right company to work with.
 
If you use a full-service broker, you will need to study the broker’s reputation to determine if the person and the company are right for you. You need to read all the fine print and be ready to spend from $2,000 to $10,000 upfront to get started.
 
If you use a discount brokerage, you may be able to start with just $500, and for some types of investments, it might be even less to get started. It depends on what firm you choose to work with, your goals, and some other factors.
 
So, first, determine if you want a full-service broker or a discount brokerage firm, then compare what is available. 
 
Researching Brokerage Firms
 
Here are some questions to ask as you do your research to find the right broker for you.
  • Minimum opening balance – How much are you required to deposit into the account to get started? This is important because if that brokerage account needs $10,000 to get started and you don’t have that amount, you can cross it off the list.
  • Commission – How much money do they charge for each trade? Is it a set fee or a percentage?
  • Research available – How much research do they offer so that you can make good choices for your investments?
  • Education – Many discount brokerages also offer online education to help you understand the investments you plan to take advantage of.
  • Services – Do they offer analysis of your accounts with projections, reports, and other information to help you make excellent choices?
  • Investment tools – Do they promise to make your investment quickly; do they offer credit cards that enable you to use your balance? Can you make investments online, via mobile devices, and so forth?
 
Doing a full assessment of the different benefits to each brokerage firm is important. It’s a good way to narrow them down so you can make a good choice as to which firm you prefer to use. Most of all, having some idea of what they offer compared to what you want will keep you from spending more than you have to.

How to Avoid Problems with Your Investments

You can completely avoid most problems with investing if you do your due diligence, don’t expect something for anything, and avoid being greedy. It can be hard, though, when you see those dollar signs in your eyes. 
 
To avoid common problems, be sure to consider the following:
 
Educate Yourself Before You Spend Your Money
 
There is no reason you need to invest in anything that you don’t understand or “get” unless you are investing in a mutual fund that has a professional manager. Buying stocks on your own is possible, and something does, but it’s not like playing a slot machine where you put your coins in any old device and hope for a payout.
 
You can make excellent investments that pay off most of the time if you educate yourself. Thus, you avoid the problem of losing your money and trying to “play the stock market” like a slot machine.
 
Invest with Logic, Not Love
 
Money is often a very emotional part of our lives. Suze Orman does a great job explaining the emotional aspects of money, but she’s clear that when you invest, it needs to be based on the financial benefits of doing so and not just because you are in love with the business.
 
Love has nothing to do with it and can get you into trouble. You can start with love and use that as your basis to investigate, but don’t allow love to cloud your judgment. Money is not something to play with.
 
Understand That Investing Is a Long-Term Plan
 
Except for day traders, for most people investing is a long-term plan. Do not think you can make money day trading until you’ve received a Master’s level of education.
 
You can teach yourself there are enough books and enough information online to get that education – but realize that investing is a long-term plan for your future. The market will rise and fall, and it’ll be like a rollercoaster, but over time you’ll be happy you invested wisely and let things ride.
 
Know What Fees, Charges, and Commissions You’re Paying
 
This goes back to the idea that investing is a long-term plan because some people run into huge problems due to not understanding the cost of going in and out of a market and switching stocks, selling, and buying. So it’s better to study your options and choose based on being educated about a stock, then once you buy, stick to it for the long haul. Then, even with some ebb in the flow due to the charges, you’ll come out ahead.
 
Don’t Try to Time the Market
 
Very well-trained financial planners and investors often make poor decisions when they try to time the market and guess when the stocks have peaked and sell and buy something else low. Unless you are 100 percent sure, don’t do this. Instead, ride the wave and stick to your choices long-term. See a theme yet?
 
Finally, please do not allow your emotions to rule you when it comes to investing. There is a risk. You will lose money. But, overall, you will gain money. It can be very hard to let go of emotions when you see one of your investments go through the basement. However, you have only to invest money you can lose and keep doing it for the long-term benefit

13 Mistakes Beginner Investors Make

As a beginner investor, it’s important to know what mistakes people made before you. After that, you have no reason to go out on your own and reinvent the wheel. People had gone before you and made all the mistakes. So you can learn to do it right the first time.
 
Here are 13 common mistakes you’ll want to avoid.
 
1. Paying More Fees and Commission Than You Should – Do your due diligence to choose the right brokerage firm based on whether you want a full service or discount broker. Compare apples to apples and choose the best brokerage for your needs.
 
2. Owning Multiple Mutual Funds – Most mutual funds are invested in different quantities of the same stocks and bonds. Therefore, you only need to invest in one mutual fund. If you have more money to invest, choose another investment or put more into the same fund.
 
3. Basing Expectations on Past Growth – You will be asked to understand that investing is a long-term situation with gains of about 11 percent seen in 20 years. However, when choosing one particular fund or business to buy stocks in, don’t use the past as your guide. Instead, use the news and financial projections because a company can be fabulous, but the stores and earnings pretty much maxed out.
 
4. Making Choices Emotionally – This can happen while watching the news. You see a story about something, and it either makes you excited, and you run to your computer to buy that new best thing, or you sell out due to some doomsday report. This is a dangerous practice. Instead, use common sense and take your time researching before changing any investment.
 
5. Thinking a Great Business Means a Great Investment – There are many great businesses out there that are super profitable. However, their stocks are maxed out, and they aren’t going to see growth in the short or long term. So sometimes you miss the boat. Look for the next new thing to come along instead.
 
6. Believing High Dividend Payouts Are Good – When a company is paying high dividends, it doesn’t mean anything good. Sometimes they are only paying high dividends to attract investors, or it might mean that the stock value has been reduced or something else is wrong. Sometimes a company that pays high dividends is a good choice, but don’t make your only criteria. 
 
7. Making Too Many Trades – Each trade incurs a fee; therefore, making too many trades could cost you more than you earn when it’s all sorted out. Be sure you are making a trade for a good reason, not emotionally based. Take your time, do your research and make trades with a lot of thought behind them.
 
8. Not Fully Funding Tax-Favored Retirement Accounts – Individual retirement accounts such as 401(k)s and Roth IRAs should be fully funded before you choose to invest in anything else. If you don’t do it, you’re throwing money down the drain.
 
9. Not Saving for a Rainy Day – By the same token, before you save any money at all for investing, you should have available 8 to 12 months of basic bare-bones living expenses. You can, by the way, keep that in a Roth IRA and get to it without penalty and pay it back.
 
10. Not Contributing the Max with Employers – If you aren’t contributing the most you can to your employer’s investment opportunity to get the most in matching funds, you’re throwing money in the trash. For example, if your company will match 100 percent of your contributions up to 10 percent of your income and not contribute enough to max that out, you’re leaving money on the table.
 
11. Spending 401(k) Money – When you switch jobs, don’t take the 401(k) out in cash. Instead, roll it over. If you take it in case, you’re going to pay the penalty and ruin your chances of maxing out your retirement savings.
 
12. Watching Financial News – The fact is, financial news is often slanted to favor advertisers. Plus, it can cause you to lose faith in your own choices. Choose sources that aren’t slanted by advertising. It is best to choose one or two gurus that you’ve researched well rather than get your advice from a paid TV announcer.
 
13. Not Starting Sooner – The fact that compounding interest starts sooner rather than later is essential in seeing success in investing. The market is like a rollercoaster and, over the short term, It isn’t always a good investment. But, over the long-term history, it has shown an average of 11 percent earnings over 20 years.
 
Avoiding these mistakes will ensure that you have a successful investing experience. Find an expert you trust, a good brokerage firm, set your goals, and keep going until you succeed.

Myths and Facts about Investing

There are a lot of myths when it comes to investing that you’ll need to overcome so that you can succeed. To help you, here are some myths and facts surrounding investing that you need to know. 
 
 
Myths:
 
#1 Studying the Market as a Whole Improves Outcomes
 
Instead of worrying about the market, it’s more important to understand your personality and what you can handle in terms of risk and study the individual company you want to invest in. That information is far more important than the overall market.
 
#2 Stay Out of International Investments
 
The worst thing you can do is avoid international markets. We live in a global society, and often, when one country is down, another is up. Plus, there are many emerging markets in other countries that are brilliant investments that you will regret missing out on trying to stay domestic. Never overlook opportunity by buying into the myth that your country is the best at everything.
 
#3 The Past Predicts the Future
 
This is true in some sense, in that the past has shown that over some time of at least 20 years, you can typically expect an 11 percent return on investment. However, this is a bad way to determine whether you should buy any one particular fund. Just because a fund did great last quarter doesn’t mean it will do well next quarter. Study that specific industry to figure out as best as you can where it is going. It could be at the bottom, ready for more, or it could already be at the top.
 
#4 Difficult Strategies Are Always Best
 
Sometimes a difficult strategy will pay off, but it’s not always best, of course. Often, and more often than not, simple is best when it comes to investing. But it might even be a terrible idea if something is super-complicated and end up costing you a lot more than something easier.
 
 
Facts:
 
#1 You Will Never Beat the Market
 
That anyone can beat the market is crazy. This is a fact: you will never beat the market. So much goes into every single day of the overall market and into each business or commodity you’ve invested in that it would be impossible to “beat” the market. So do your due diligence on each investment you plan to make and rely on that, instead of trying to be better than everyone else or thinking you’re smarter than others before you.  
 
#2 You Have to Spend Money to Make Money
 
One of the biggest killers of dreams is thinking you can get something for nothing. The more money you invest and the more money you spend on investing, the more return you’ll likely see. That’s why higher risk gets a higher reward, whereas lower-risk equals a lower reward. 
 
#3 The Best Way to Succeed Is to Take Risks
 
That brings us to the fact that taking risks will make you more money when investing. But, don’t take a chance without research and understanding what you’re doing. Stocks are always going to be risky, but the reward will more than likely outweigh the risks.
 
#4 Starting Sooner Is Always Better
 
Due to the facts of compounding interest and the value of time, the sooner you start, the more risk you can take and the more reward you’ll get. The fact is, if you started investing just 100 dollars a month at age 22 for 43 years, assuming an average rate of interest to be 10 percent a year, you’d have $716,904.84 at age 65. However, if you started just ten years later, you’d only have $269,024.37 at age 65. What a difference ten years makes.
 
Accepting these myths and facts will be the first step in getting started investing on the right foot. 

Eight Tips from Investment Professionals

There are some basic things that all professionals recommend that every investor do. There isn’t much argument about these tips. Famous gurus from Warren Buffett to Suze Orman to your unknown financial planner and the U.S. Securities and Exchange Commission all agree on these tips without equivocation. 
 
1. Pay Off Consumer Debt Fast 
 
Carrying around credit card debt is not only bad for your present, but it is also very dangerous for your future. Credit cards often charge more than 14 percent today, and some are often close to 40 percent. If you had a $2000 balance on your credit card that has only 12 percent interest and you only paid the minimum payment of 2 percent of the balance, it would take you over 13 years to pay it off. You’d pay almost $4K for the privilege. 
 
2. Put Investments First
 
Some professionals call it “paying yourself first,” and it is. If you set up an automatic payment schedule with your bank or employer to deduct the money out of your paycheck before you even see it, it will make it easier to keep saving because you won’t have it to spend. For example, if it’s not part of your budget, you won’t spend it eating out and movies.
 
3. Save 8 to 12 Months Living Expenses
 
If you lost your job tomorrow, how long could you pay your bills? Sadly, for most people, it’s just about a month. It may take eight months to find a new job. Figure out your bare-bones expenses if you canceled cable TV and cut back as far as possible. Then, ensure that you save that amount of money before investing one dime in something else.
 
4. Diversify
 
Investing in just one thing is always a mistake. If your employer offers a plan, definitely invest in it, but don’t make that your only investment. The reason is that if you lose your job, the business goes under, or something else happens, that money may not be there from you. Putting all your eggs in one basket is always a mistake. 
 
5. Take Free Money When It’s Offered
 
Your employer probably offers a plan that you can invest in and that they match. If this is the case, definitely take advantage of it because it’s just like throwing money in the trash if you don’t. They give you free money by matching up to a certain amount of your investment; you should take it.
 
6. Teach Your Children about Personal Finance
 
One of the best things you can do for your children is to teach them about personal finance. Schools do not teach children about how to take care of themselves financially at all. Or if they do, it’s a very short course about how to write checks. So instead, give your children an allowance for doing chores and help them save some, invest some, and spend some. 
 
7. Do Your Due Diligence
 
Never give anyone any money for investment until you have done your research. There is no such thing as “invest now or miss out.” High pressure is expected when so much money is at stake, but you do not have to and should not invest that way. Research the people, research the investment, and unless you are sure it’s a legitimate thing, do not give anyone your money.
 
8. Remember What’s Important 
 
Suze Orman said, “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” Nothing could be truer. Money is more than money. Money is the freedom to be with the people you love, experience new things and even be healthy.
 
When people have “been there and done that” before, it’s important to pay attention and listen to what they say. The biggest problem with new investors is that they think they can somehow defy the 

Tools to Help with Your Investment Decisions

Making good financial choices and investment decisions requires a lot of research, education, and help. The following tools will help you before, during, and after you invest.
 
Using tried and tested tools of the trade will help you learn more and get up to speed fast to make excellent choices and make more money.
 
1. Investor.gov – This is part of the U.S. Securities and Exchange Commission, and they offer many tools, advice, and information for investors who want to invest in the United States. You can get news, alerts, tools like calculators, publications, research, outreach, and more. 
 
Link – http://www.investor.gov/
 
2. Nasdaq.com – The National Association of Securities Dealers Automated Quotations has many tools available for beginner and advanced investors. You can analyze risk, get live quotes, use the portfolio wizard, and more.
 
Link – http://www.nasdaq.com/investing/tools.aspx
 
3. Firstrade – Firstrade is a highly rated online discount brokerage offering various services about buying stocks, bonds, and more. You can do it yourself or get assistance from a broker with Firstrade. In addition, they have an excellent education center, and you can access it all with your smartphone.
 
Link – https://www.firstrade.com/content/en-us/researchtools/overview
 
4. Personal Capital – A registered investment advisor with the SEC manages more than a billion dollars. The service brings all your accounts together to manage under one dashboard. You can even plan your income taxes from the dashboard.
 
Link – https://www.personalcapital.com/
 
5. Mint – Hands down the best free personal finance tool you’ll find. Track investments, personal income, and expenses by automating it through the internet. It connects with your banks and updates automatically. In addition, you can balance your checkbook and any account you have through the system.
 
Link – http://www.mint.com/
 
6. SigFig – This online portfolio manager goes one step further using proprietary algorithms to give suggestions on better investments and gives an estimate on how well your portfolio will do over a certain period. You can pay a small fee to have your portfolio fully managed for you or do it yourself.
 
Link – http://www.sigfig.com/
 
7. Google Finance – Business and financial headlines, stock quotes, and more. Plus, Google Finance can track your portfolio and the market from your computer or smartphone, all for free. In addition, you can upgrade to get more information, such as charts with 40 years of data included. 
 
Link – http://www.google.com/finance
 
8. Yahoo! Finance – This is a lot like Google Finance but more popular due to the updated information. However, it has fewer personal finance tools than Google Finance. Nevertheless, it’s still a good option, and you don’t have to register if you don’t want to look at the news.
 
Link – http://finance.yahoo.com/
 
Using any of these tools can help you with your personal financial and wealth-building goals. But, the most important tools you have are your brain and your bank. So, if you are a member of a credit union or bank at a local bank, don’t discount the tools and information they have to help you meet your financial goals.

Understanding Financial Statements

When you get involved with investing, it’s important to understand some basic information about how to read and understand financial statements especially if you are a do-it-yourself type.
Knowing what they mean can help you make sound decisions about your investment choices.
 
Types of Statements
 
There are four basic financial statements that every business should have:
  • The Balance Sheet – A report of the financial position of a business entity at any point in time. The balance sheet gives a sort of snapshot of the business’s health during a specific period, ending today. 
Formula: Assets = Liabilities + Equity
  • The Income Statement – This is the financial statement that most banks and accountants want to see because it essentially shows the business’s net earnings or net profit during a period, usually a year. 
Formula: Net Income = Revenue – Expenses or Net Income = Revenue – Expenses + Gains – Losses
  • The Statement of Retained Earnings – This statement is completed after dividends are paid, usually yearly. This amount is carried over to the financial statements starting the New Year. For example, if at the year ending 2009 the business’s net earnings showed at $100,000, that is before dividends are paid. If the business then pays out $5,000 in dividends and the retained earnings from last year (2008) was $4,000, this year it’s $5,000 + $4,000 for a total of $9,000. This number is carried over next year, too. 
Formula: Ending Equity = Beginning Equity + Investments – Withdrawals + Income
  • The Statement of Cash Flows – Revenue doesn’t always mean that you have cash, and the statement of cash flows is a good example of why that is true. Sales on credit, sales that have not been paid yet, and work being performed and not billed yet, won’t appear on the statement of cash flows. This statement only shows you received money and money that has gone out during the period count.
Learning about each of these statements is essential to your financial future so that you can invest properly. You’ll want to see all of these statements for any business that you want to invest in. Taken all together, you can assess the health of any business. For publically traded companies, these statements are available for public view.
 
What to Look For on the Statements
 
What you want to look for are financials that make sense, plus you want to see a profitable business that has room for growth. Some key things to look for are:
  • Poor Cash Flows – If a business has poor cash flows even if they are earning money overall, this can indicate some trouble collecting, which can indicate many problems. Very good business ideas fail all the time due to bad cash flow.
  • High Dividends – On the statement of retained earnings, if a business is paying out high dividends even if they’re not that profitable, that is cause for concern. They are likely trying to attract investors because they are short on funds.

  • Footnotes – Often, you can get a lot more information reading the footnotes on any financial document than you can look at the document. Please read all the footnotes so that you can find out the information they may not want you to notice.
Once you learn what to see on each statement, you’ll have no trouble looking at any business and knowing their situation. From this, you will make an excellent choice in a matter of an hour or two per business.

What You Need to Know about Investment Portfolios

Your investment portfolio is a collection of different investments for which you’ve betted to earn income. The goal is not to lose the principal amount. So, you only have one portfolio, but it will include all of your investments. But, an investment portfolio is also something a bank or broker might offer, such as a mutual fund.
 
This is a group of investments that you don’t have to do anything with once it’s set up, based on the risks you will take. 
 
Asset Allocation 
When you invest in a portfolio, you do so based on many factors – including risk level and the amount of money you have to invest. Usually, you’ll be investing in a combination of stocks, bonds, and cash or cash equivalencies. 
 
Risk Tolerance
The way you decide upon asset allocation is based on how tolerant you are of risk. This is not just an emotional decision. It would be best to make this decision based on your age, where you are in your career, your personal life, and your goals for all of these areas of your life. Then, you’ll choose a portfolio based on these issues.
 
Diversification
Depending upon your risk level and the amount of money you have to invest, you’ll choose a certain percentage of stocks, bonds, and cash. The younger you are, the less risk-averse you should be, and the more percentage of your portfolio can be in stocks and bonds rather than cash. The opposite is true if you’re at retirement age or have nothing extra and can’t risk losing your investments. By diversifying, you can mitigate your risk.   
 
Choose and Let It Ride
If you’re a smart investor, once you choose a portfolio, you’ll leave it and let it ride for as long as you believed you would – usually until retirement. So, if you’re 22 and invest in a certain fund, it’s already prearranged to keep a certain percentage of stocks, bonds, cash, and other investments during each year of the fund. 
 
Rebalancing Your Portfolio
At some point, you may need to rebalance your portfolio to be assured it matches up with your financial goals. Still, mostly, you’ll choose your allocation based on the money you have to invest and your risk tolerance level, and let it stay like that slowly moving toward safer and safer investments as you get closer to retirement. This only happens if you’re self-managing because you will automatically balance a managed fund without your intervention.
 
The key thing is to learn as many definitions as possible for all the new terms you will learn as you start your investing journey. But don’t be afraid of learning and getting involved.
 
Money is not scary, and it’s not beyond your understanding. The longer you do it, the more you’ll understand. So, get started as soon as possible, even if all you have is 100 dollars a month. In time, it will pay off.

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