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Investing your Money
If you are anxious to starting investing your money, you can get started right away without having a lot of knowledge about the stock market. Start by being a conservative investor with a low risk tolerance.
This will give you a way to making your money grow while you learn more about investing.
Start with an interest bearing savings account. You may already have one. If you don’t, you should. A savings account can be opened at any bank. A savings account should pay 2 – 4% on your money.
It’s not a lot of money – unless you have a million dollars in the account – but it's a start, and it's money making money.
Next, invest in money market funds. This can often be done through your bank. These funds have higher interest payouts than typical savings accounts,and they work much the same way. These are short-term investments, so your money won’t be tied up for a long period of time – but again, it's money making money.
Certificates of Deposit are also sound investments with no risk. The interest rates on CD’s are typically higher than those of savings accounts or Money Market Funds.
You can select the duration of your investment, and interest is paid regularly until the CD reaches maturity. CD’s can be purchased at your bank, and your bank will insure them against loss. When the CD reaches maturity, you receive your original investment, plus the interest that the CD earned.
If you are just starting out, one or all of these three types of investments is the best starting point. Again, this will allow your money to start making money for you while you learn more about investing in other places.
Online Trading
The invention of the Internet has brought about many changes in the way that we conduct our lives and our personal business. We can pay our bills online, shop online, bank online, and even date online!
We can even trade commodities and futures online, buy and sell stocks online. Traders love having the ability to look at their accounts whenever they want to, and brokers like having the ability to take orders over the Internet, as opposed to the telephone.
Most brokers and brokerage houses now offer online trading to their clients. Another great thing about trading online is that fees and commissions are often lower. While online trading is great, there are some drawbacks.
If you are new to investing, having the ability to actually speak with a broker can be quite beneficial. If you aren’t trading market savvy, online trading may be a dangerous thing for you. If this is the case, make sure that you learn as much as you can about trading commodities, futures and stocks before you start online trading.
You should also be aware that you don’t have a computer with Internet access attached to you. You won’t always have the ability to get online to make a trade. You need to be sure that you can call and speak with a broker if this is the case, using the online broker. This is true whether you are an advanced trader or a beginner.
It's also a good idea to go with an online brokerage company that has been around for a while. You won’t find one that has been in business for 50-years of course, but you can find a company that has been in business that long and now offers online trading.
Again, online trading is a great thing – but it's not for everyone. Think carefully before you decide to do your trading online, and make sure that you really know what you are doing!
Know Your Money Risk Tolerance before Trading
Each trader has a risk tolerance that should not be ignored. Any good broker or financial planner knows this, and they should make the effort to help you determine what your risk tolerance is. Then, they should work with you to find investments that do not exceed your risk tolerance.
Determining one’s risk tolerance involves several different things.
First, you need to know how much money you have to invest, and what your investment and financial goals are.
For instance, if you plan to retire in 10-years, and you’ve not saved a single penny towards that, you need to have a high risk tolerance – because you will need to do some aggressive, risky investing in order to reach your financial goal.
On the other side of the coin, if you are in your early twenties and you want to start investing for your retirement, your risk tolerance will be low. You can afford to watch your money grow slowly over time.
Realize of course, that your need for a high risk tolerance or your need for a low risk tolerance really has no bearing on how you feel about risk. Again, there is a lot in determining your risk tolerance.
For instance, if you invested in the stock market and you watched the movement of that stock daily and saw that it was dropping slightly, what would you do?
Would you sell out or would you let your money ride? If you have a low tolerance for risk, you would want to sell out… if you have a high tolerance, you would let your money ride and see what happens. This is not based on what your financial goals are. This tolerance is based on how you feel about your money!
Again, a good financial planner or broker should help you determine the level of risk that you are comfortable with, and help you choose your investments accordingly.
Your risk tolerance should be based on what your financial goals are and how you feel about the possibility of losing your money. It’s all tied in together.
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The Iowa Electronic Markets are real-money futures markets in which contract payoffs depend on economic and political events such as elections
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