When it comes to investing money, novice investors may only consider savings accounts or stocks. Though these are logical forms of investments, they are not the best solution for everyone’s financial goals.
Bonds are issued by businesses or governmental agencies that need money. You simply purchase a bond at $1000, or in multiples of $1000, and receive interest payments quarterly, semiannually, or annually at a specified rate throughout the bond’s life. Most bonds have fixed interest rates, but some are floating rates, meaning the interest fluctuates according to market rates through a specific index.
Investing in bonds has its pros and cons. One never can be certain if the bond issuing company will default on the loan, but an investment grade given by bond rating agencies such as Standard & Poors, Fitch, and Moody’s can serve as an assurance of risk. Bond rates start at “A” to “Aaa” in the top category, meaning low risk, meaning the issuer has a great credit rating. Likewise, “D” or “Ddd” signifies high risk. If a $1000 bond is bought at a discount, say $800, the investor will still receive $1000 at maturity plus interest, increasing the total yield percentage over its life.
Mutual funds are a diversified mix of stocks, bonds, and other securities. They serve as professionally managed portfolios assembled by a group of experienced investors. Hence, this is like choosing a professional money manager who has done the research so you don’t have to.
A typical minimum investment for mutual funds comes in $100 denominations. Those purchasing less may do so under monthly purchase plans. By considering this route, a beginner need not spend thousands in individual stocks and bonds nor a countless number of hours managing the portfolio. Mutual funds have quick liquidity also.
Commodities futures or futures contracts are a type of investment based on an arrangement to buy or sell goods at a specified price by a certain date. This may be anything such as produce like potatoes to be resold to a grocer. Either seller or buyer may gain or lose depending on if the market value of the goods rises or falls.
Silver and gold coins are another option for investors to diversify their portfolios. The best advantage is that silver and gold have been stable throughout the years, good economic times as well as bad. Either serves as a promising way to increase the value of an investment.
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Before a beginning investor can consider FOREX trading, he or she must realize what it is and how it operates.
Forex is simply a word meaning foreign exchange or the currency market. It is the largest trading facility in the world where investors trade one form of currency for another. Corporations that operate internationally typically pay wages and expenses to those who work in other countries rather than the ones they sell products in. Likewise, these firms look to trade other national currencies for their own.
The Forex market is an over-the-counter (OTC) market where no two currencies can be traded on a single universal exchange. It is open 24 hours a day permitting free trade amongst individual investors, brokers, and banks. This also enables private currency speculators to work whatever hours they may and trade during their time off. Relevant world events and news stories are broadcasted publicly enabling people from various nations to be updated simultaneously.
Eight Advantages of Trading on Forex:
Trading on the Forex system offers a myriad of advantages:
- It’s opened 24/7 and can be accessed worldwide providing one has an internet connection.
- A free demo account is available enabling beginners to gain experience without blowing their own money.
- Rather than spending countless hours researching stocks, you can make money by working a few hours per week online.
- There are 40,000 stocks to choose from on Forex.
- Since FOREX is the world’s largest trading market, operating around $3.2 trillion dollars per day, its market cannot be cornered by anyone.
- FOREX is the most liquid form of trading available, enabling traders to close out any time at a fair price.
- A trader is able to make money whether the market rises or falls.
- Startup costs are low compared to other forms of trading.
A Few Words of Advice:
As easy or enticing as it may sound to try the Forex market, this is not a place to get rich quick. Before you consider trading here you must first become well educated about the system. Find a broker who offers an unlimited demo account in which you can do practice trades with “fake” money. Once you’ve mastered basic trading skills, you may open a live account and trade with real money. Remember, you must be patient and persistent. This is no place for the emotional, greedy people to spin an instant profit.
Are you new to Forex? Please read this article if you are serious to become a profitable Forex trader: Become a Profitable Forex Trader in 5 Easy Steps