(Continued from Part I)
If you are not a conservative or moderate investor, then you are an aggressive one.
Aggressive investors commonly do most of their investing in the stock market, which is higher risk, especially in a volatile economic climate. As we write this, for example the Dow went up 400 points on Tuesday and has pretty much last all those gains when it plunged about 175 points again on Thursday and on Friday.
Aggressive investors also tend to invest in business ventures as well as higher-risk real estate. For instance, if an aggressive investor puts his or her money into an older apartment building, then invests more money renovating the property, they are running a risk.
They expect to be able to rent the apartments out for more money than the apartments are currently worth, or to sell the entire property for a profit on their initial investments.
KNOW YOUR MARKET
In some cases, this is a worthwhile gamble, but given the current property market, especially in certain areas, it might not be the most sensible place to put your money at the moment.
RISKS AND REWARDS
Before you start investing, it is very important that you learn about the different types of investments, and what those investments can do for you. Understand the risks involved, and pay attention to past trends as well. History does indeed repeat itself, and investors know this first hand.
All of the funds you have the chance to invest in for your 401k retirement fund, for example, should have a full record of past history, both recently, in the past year, the past 5 years, and even the past 10.
For those of us interested in saving for college, a 529 also offers similar investment choices, with different portfolios. Since we are based in New York State, we have certain options administered by Vanguard Funds.
OTHER HANDY WAYS TO INVEST
We could have opted for their choice, but with a little more time, effort, and research at the Vanguard site we are making that much more money, and with a credit card from Upromise which gives you money on all the purchases you use on the card, plus extra percentages for things you buy regularly, like household products, it makes it easy to save money and invest it even if you don’t think you can afford it with your present budget.
STABILIZE YOUR CURRENT FINANCIAL SITUATION BEFORE YOU INVEST
As we said in a previous article, make sure that you stabilize your current financial situation before you start thinking of investing, and remember how credit card companies make their money.
But investing in a 401k if the money is taken out as pre-tax dollars, and especially if your company gives you a match, is very worthwhile and easy. So is a 529, and you can get started with as little as $25.
KNOWLEDGE EQUALS SUCCESS WHEN IT COMES TO INVESTING
Educating yourself by looking at these options is the best way of dipping your toe in the water, and if you start making money, well, stick to your formula and do a bit more.
Above all, though, know your investing style and how much you can afford to invest, because it really means, how much time can you spend building your portfolio, and how much can you afford to risk on different types of investments.