[The following is a guest post by John Border.]
The best time to develop an investment strategy is now, because saving early in life cannot be understated. As a young adult you may wonder how to begin and what type of investment opportunities are available to you.
There are many options such as 401k, annuity funds, bonds, CD’s, long-term and short-term investments, stocks, mutual funds, and retirement accounts. There are so many investments options that it is problematic to know how to begin.
Saving Early With Guidance
An experienced investment counselor can help to tailor a plan that will meet your needs. The counselor can help to you decide what type of investments you want and whether you are comfortable with high risk, low or medium investment alternatives. Most counselors will encourage investors to diversify their stock portfolio so it contains a variety of stocks, international stocks, bonds, high yield, and low yield investments.
What is preferable is to have investments that will continue to grow at a steady rate, with the moderate to low risk factors.
There are some stocks investments that might seem quite profitable during one-quarter and then sustain a substantial loss during the next quarter. A good counselor can help the young investor put together a portfolio which will give them the profits needed to buy a home and look forward to a comfortable retirement. The young investor should examine their investment goals and the different ways they can make their income grow.
A Few Options For Saving Early
1. 401(k) investments are considered by many employees as their primary retirement savings. The young employee may feel that after they establish this account, that all they need to do is let the professionals take care of it. But the reality is that to increase the growth of their investments they need to remain actively involved in managing their assets. One of the most effective ways to do this is with an asset allocation models by age strategy whereby your age determines the kind of assets you should have.
2. Mutual funds are created when multiple investors create a large amount of money. These combined assets are then invested and are able to achieve substantial gains for the investors due to their size. Most companies allow individuals to diversify their investment of these funds.
3. Fixed income funds are where 401 (k) funds are assigned to fixed interest rates. This is an extremely low risk account investment, but the young investor can end up with slower gains due to the poorer interest rates.
4. Bonds can be in the form of savings bonds through the US Treasury Department or corporate bonds. The treasury bonds have fixed rates and low risk, whereas the corporate may fluctuate.
5. Stocks are the highest risk because the of the market’s instability. Stock investing can produce the quickest gains, but they need to be balanced with other types of funds.
The best investments for young people are those which will give you a diversified portfolio that will give security for the future. It is essential as a young person to develop an investment strategy for the future, understanding the importance of starting saving early in life, so you can have a great retirement. On top of investments, you also need to consider acquiring cheap life insurance quotes in order to properly protect your family.
Author Bio – John Border is stock market enthusiast and a banker who writes about stock market basics and has interest in emerging markets.
photo by Memory Freak
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