Invest in your Future

Investing is a scary topic for a lot of people. They know that they should start investing early in their life, but most people have no idea where to even start.

First off, let’s go over the difference between saving vs. investing. Saving is holding money that you intend to spend on something in the future. Investing is putting money in some type of investment where your goal is for your money to gain value over time. By investing early, other than compound interest itself (making interest on your interest), you are giving your money time to grow and it will grow more rapidly as time goes on.

You can invest your money in a number of different ways. Some examples are through stocks, bonds, mutual funds, real estate, and commodities. Stocks and bonds can be a little risker, but if you put them into a portfolio, they balance each other out and the losses won’t be as hurtful to you. It is important to know what kind of investor you are! Whether you like to take risks or stay on the safer side, there are different options for everyone when it comes to investing.

Let’s look at the story of two savers to see how investing early is beneficial to you!

Now that you can see the benefits of saving early, let’s look at some investing facts!

Here are some interesting facts about investing:

1. When planning for retirement, really plan for it. In addition to what you need to live comfortably, factor in increases in prices and cost-of-living and those unexpected expenses.

2. It is mathematically impossible for investors to “beat the market”.

3. You can invest your money in money. Another form of investment would be on a currency exchange.

4. When you buy stocks, you’re becoming a company owner. A stock is an ownership share in a company.

Here are some questions that can test your knowledge on investing!

1. What percent of retirees have 90% of their retirement funded through Social Security?

2. 84%

3. 36%

4. 23%

5. 56%

Answer: 36%

1. Which retirement account will your employer match?

2. 401 (k)

3. Traditional IRA

4. Roth IRA

5. It Depends

Answer: It depends

1. Is there such a thing as taking on zero risk in the market?

2. True

3. False

Answer: False

1. What is the riskiest thing you can invest in?

2. Stocks

3. Bonds

4. Mutual Funds

5. Futures

Answer: Futures

1. Which retirement account won’t tax your withdrawals once you turn 59 ½ years old?

2. Roth IRA

3. Traditional IRA

4. 401 (k)

5. Keogh Plan

Answer: Roth IRA

1. Which of these is NOT a fee you have to pay to have your money invested in a mutual fund?

2. Front-end

3. Back-end

4. 12 b-1

5. All of these are fees

Answer: All of these are fees

1. Which market index gives the best estimate of the market for any given day?

2. S&P 500

3. Dow Jones Industrial Average

4. Russell 2000

5. It depends

Answer: It depends

1. What is the average yearly return on real estate? (think housing)

2. 8%

3. 18%

4. 15%

5. 1%

Answer: 1%

Now that you have learned a little more about investing, try it out and watch your money grow!

Stay frugal my friends!