Finance: Tips For Young Investors

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It’s imperative that you understand all the risks with investments so that you don’t make mistakes. When you’re young you can be inexperienced and your choices can make you lose money. You should take your time to learn as much as you can about the different types of investments and how to avoid losses. It’s also wise to learn from past investors and their mistakes. You can also learn from successful investor like Warren Buffett. You can improve your investing style after you have a good education about investments.

A good investment for young people is a home. You can live in it and the value will appreciate over the year. You can sell it later or build home owner’s equity. When you’re young you should save money for a home or for college because they’re two great investments. The next type of investment that you can make is in stocks and bonds. Stocks are riskier than bonds but they have a higher return rate. The return rate on stocks are 10% annually and bonds are 5% annually. You should put your money into stable companies because you can avoid losses that way. Stable companies are ones that have been in business for awhile and they continue to grow. You have to look at the financial status of the company and make sure that it’s making money and it’s not heading toward closure or bankruptcy. When you’re going to invest in a stock you should read the financial statement of the company and assess the company’s financial status. You should not invest in companies that are unstable and they’re heading downhill. You should also look out for fraud. One example is the Bernard Madoff investment firm. You want to avoid companies that are fraudulent. There’re signs that a company can be a potential fraud such as when they hide their accounting record or your monthly record and they don’t allow too much access to your account. It’s a good idea to read reviews of the companies that you’re investing in because past investors will write them. You want to look for a company that is stable and is reliable.

You should also assess your company continually on a monthly basis and especially if they have a new CEO because things can take a down turn. You should look at the company board of directors and see if they’re competent because a company is as good as its board of directors. You should look at their products and goals to see if there’s a great demand for it in the market. Apple company is a good company since its products are in high demands and that means stocks will be stable or increase in price. Microsoft is another stable company that you can invest in. You should know the top 20 companies that are stable so you can invest with them. You should not put your money in companies that you don’t know too much about. When you trade, you should minimize fees and cost as much as possible so you’re not paying too much fees. Each trade would cost you $6 and that will add up fast. When you’re investing, you should do your research well and invest in companies that are financially stable.

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