A Beginner’s Guide to Investments

Many people become overwhelmed by investing and may shy away from it. Typically this is from a lack of knowledge surrounding investments. The Merriam Webster dictionary defines investing as committing money in order to earn a financial return. Investing is a financial savvy way to allow your hard earned money to grow. Although there is risk involved with investing your money, the rewards far outweigh the risk. Investing your money properly will give you a great way to get ahead financially.

Benefits of Investing

There are several benefits associated with investing your money.

1. Your money is working for you. By investing your money into the right accounts your money will grow.

2. Investing is a form of passive income. Once the money is invested it requires no additional work from you. Any returns you yield from your investment will come with no effort. You’ll be earning money in your sleep.

3. The power of compounding interest. Each time your investment gains in interest the amount of your investment increases. You will start yielding a larger amount of interest because the balance of your investment is higher. This can allow your investment to exponentially increase.

Various Types of Investments

• Stocks- also known as equities, a way of becoming a shareholder and part owner in a company, giving you access to a portion of the profits.

• Bonds- fixed income securities that are founded on debt.

• Mutual Funds- a collection of stocks and bonds

• Real Estate- property and land and building developments.

Investments with Specific Purposes and Advantages

There are several investment accounts that have tax advantages for saving for specific life events. Retirement accounts and educational savings accounts both have tax advantages. Many retirement accounts can grow tax free, or income invested into the account can be tax deducted.

Educational savings account can be set up for minors. They are intended to save money for higher education tuition and fees. These investments grow tax free.

Investment Myths Dispelled

1. Investing is complicated and confusing. This is not true at all. With some education on how investments work, you can understand and be actively involved while investing your money.

2. Investing is too risky. While there is always risk involved in investing your money, there is so much more to earn. Balancing your investment portfolio will protect your money from risk, but also allow it to grow.

3. I don’t have enough money to invest. You do not need to be a millionaire to invest. In fact, starting out with a few thousand dollars can help you to understand the principles of investing. Your money will grow more rapidly in investments than sitting in a savings account, giving you more to invest in the long term.

Are you ready to put your money to work for you? Email Carolina Money Minders to find out how we can help you manage your investments.