Despite the tough economy, now is a great time to invest with stocks low and most people selling rather than buying. The best way to invest money, however, can be tricky to determine and it depends on a lot of personal factors and where you are in your life. This article will analyze some potential situations and help you figure out your best investment method.
The first thing you need to consider is age. If you are a young investor, first of all congratulations, investing in the stock market is a very wise move (despite the recent press), as stocks have outperformed all other investment methods over the past half decade. Being a young investor allows you some special advantages as you have the ability to invest in more risky stocks because you have more time to earn back any losses.
If you are an older investor you need to take your current retirement situation in to consideration. If you are planning on retiring in the near future you need to be sure to invest in something much less risky than stocks, preferably secure bonds, treasury bills or bonds, money market investments or something that virtually guarantees you income, even if it only a small percentage return.
Another factor you need to consider is the amount of money you make in a year, and how much you rely on for everyday living expenses. If you are heavily reliant on your day to day income, then you really should consider more secure investments, as you will have a more difficult time making up those losses in the future, whereas an investor that makes more money can afford to be risky because they would have an easier time making up big losses.
How much credit card debt do you have? Credit card debt needs to be a consideration as most investments normally yield a smaller return than the normal credit card interest rate. For example if you have a 15% credit card rate, investing in a security that returns less than 15% makes less sense than paying off your debt. - 15224
The first thing you need to consider is age. If you are a young investor, first of all congratulations, investing in the stock market is a very wise move (despite the recent press), as stocks have outperformed all other investment methods over the past half decade. Being a young investor allows you some special advantages as you have the ability to invest in more risky stocks because you have more time to earn back any losses.
If you are an older investor you need to take your current retirement situation in to consideration. If you are planning on retiring in the near future you need to be sure to invest in something much less risky than stocks, preferably secure bonds, treasury bills or bonds, money market investments or something that virtually guarantees you income, even if it only a small percentage return.
Another factor you need to consider is the amount of money you make in a year, and how much you rely on for everyday living expenses. If you are heavily reliant on your day to day income, then you really should consider more secure investments, as you will have a more difficult time making up those losses in the future, whereas an investor that makes more money can afford to be risky because they would have an easier time making up big losses.
How much credit card debt do you have? Credit card debt needs to be a consideration as most investments normally yield a smaller return than the normal credit card interest rate. For example if you have a 15% credit card rate, investing in a security that returns less than 15% makes less sense than paying off your debt. - 15224
About the Author:
Charles Johnson is a personal finance writer for PE Financial Services. Visit PE Financial for articles on investments, loans, insurance, and the best way to invest money in this difficult economy.
