How To Choose The Best Investment For You
You are not alone if you're still unsure of what to invest in in today's market. If you've been sitting on the sidelines waiting to decide what is the best investment for your portfolio, below are a few things to consider when choosing the best investment for your portfolio. (These ideas are just to help you brainstorm some options - they are not specific recommendations. Be sure your investing decisions are based on YOUR individual financial goals.)
Stocks: When considering stocks, you may want to change your style from a "buy and hold" mentality. Those days are probably gone. The economy is still not on a completely solid footing, so when you buy, you will need to monitor whether your investments continue to meet your goals. Consider big brand name companies, the companies that continue to perform in good times and bad, because consumer are dedicated to purchasing their goods, or the products are necessities. Stick with companies that have a good balance sheet, with low debt and sufficient cash flow.
Bonds: Bonds can be more of a safe investment, but you still can't be complacent when investing in bonds. As a bond holder, your returns are based on debt the company owes, not market prices for stock, however if a company fails, bondholders can be impacted too. For Federal Treasury bonds, yields are at historic lows. So, while you may have more safety with bonds, lower returns will reflect that. Take some time to research municipal bonds, federal agency bonds, utility bonds, and corporate bonds. Choose bonds backed by strong companies, or government agencies. Tax-free bonds might be an option to consider as well.
CDs and Money Market accounts: These investment vehicles are as close to savings accounts as you can probably get. They also have very low interest rates right now, even with large deposits you will likely find rates under 3% or 4%. Remember though that most CDs and money market accounts are insured (but not all - check with the bank you're buying from). With rates this low, you want to consider taking a little more risk, unless you are facing retirement, or paying for college in the next year or two. But again depending on your personal goals, keeping some portion of money parked in these safe investments might be a good idea.
There really isn't a best investment that works for everyone. Whatever you choose in your investment account should be based on your personal financial strategy. Don't let anyone tell you what is right for you; it has to fit with your goals and your risk tolerance. Spend the time to put together a financial plan, and you can choose your best investments with that plan in mind. - 23217
Stocks: When considering stocks, you may want to change your style from a "buy and hold" mentality. Those days are probably gone. The economy is still not on a completely solid footing, so when you buy, you will need to monitor whether your investments continue to meet your goals. Consider big brand name companies, the companies that continue to perform in good times and bad, because consumer are dedicated to purchasing their goods, or the products are necessities. Stick with companies that have a good balance sheet, with low debt and sufficient cash flow.
Bonds: Bonds can be more of a safe investment, but you still can't be complacent when investing in bonds. As a bond holder, your returns are based on debt the company owes, not market prices for stock, however if a company fails, bondholders can be impacted too. For Federal Treasury bonds, yields are at historic lows. So, while you may have more safety with bonds, lower returns will reflect that. Take some time to research municipal bonds, federal agency bonds, utility bonds, and corporate bonds. Choose bonds backed by strong companies, or government agencies. Tax-free bonds might be an option to consider as well.
CDs and Money Market accounts: These investment vehicles are as close to savings accounts as you can probably get. They also have very low interest rates right now, even with large deposits you will likely find rates under 3% or 4%. Remember though that most CDs and money market accounts are insured (but not all - check with the bank you're buying from). With rates this low, you want to consider taking a little more risk, unless you are facing retirement, or paying for college in the next year or two. But again depending on your personal goals, keeping some portion of money parked in these safe investments might be a good idea.
There really isn't a best investment that works for everyone. Whatever you choose in your investment account should be based on your personal financial strategy. Don't let anyone tell you what is right for you; it has to fit with your goals and your risk tolerance. Spend the time to put together a financial plan, and you can choose your best investments with that plan in mind. - 23217
About the Author:
Looking for the best investment for your money right now? Sue Calhoun writes about alternative investing advice from not-the-usual sources.
posted by X - Men @ 1:12 AM
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