Monday, December 26, 2011

4 Types of investments (and which one is incomparabl the best)

Many people in life think that the majority of their money will come from their job income. In reality, by investing your money correctly you will be able to earn more from your investments than from your job. While there is a large selection of possible investments, each with their own risks and rewards, I have narrowed that selection to four of the most discussed. Generally, the greater the return on the investment, the higher the risk is.
Bonds are usually the safest investment that can be made, however it comes with very limited upside. A bonds are sold by government and corporations in order to raise funds for a project. By purchasing a bond, you are basically lending the institution money to perform this project, with the understanding that you will get that money back plus interest. While there are many types of bonds, you can be pretty sure that the higher the interest rate is, the more risk there is.
What it means for investing:
Bonds are a good place to put your money if you cannot tolerate any risk, as it is a fixed income investment. Bonds purchased from the United States are one of the safest, albeit least rewarding, ways to invest your money.
3. Gold
Gold is useful for many things, including wooing pirates and women alike. More importantly, gold has been used as an investment for hundreds of years. To invest in gold, you can either own the physical gold or own virtual shares of gold. These virtual shares are traded like a stock and mimic the value of actual gold.
What it means for investing:
Gold has long been thought of as a safe bet during times when the economy and the government are not looking so hot, and research has generally shown that gold does well when people are worried about the economy. Owning some gold is not a bad idea to diversify your portfolio.
Simply put, a mutual fund is a fund created by someone who pools together large amounts of money from different people, and invests in various investments. There are many different types of mutual funds, some investing in energy, emerging markets, or even other mutual funds.
What it means for investing:
Investing in a mutual fund is a good way to diversify if you are strapped on cash, however there are often fees taken out of the profits of mutual funds which add up over time. Personally, I think that if you own a fund made up of stocks, you may as well research which stocks in the fund are the best and purchase those specific stocks.
1. Stocks
Investopedia, an online investing encyclopedia, views stocks this way: “This fabulous category of financial instruments is, without a doubt, one of the greatest tools ever invented for building wealth.”  I agree wholeheartedly with this statement and think that when choosing what to invest in, stocks are by far the best choice. A stock is a share of a company, and the price of the stock moves depending on how people value the company that it represents.

What it means for investing:

While many people view stocks as too risky for at home investors, they are truly the best way to build wealth through investing. By both the companies and the stocks, individual investors should have no problem finding safe places for their money, and all investors should at least into investing in stocks.

As always, your feedback is important to me. Please post any advice, critiques, or questions in the comment section below!

Friday, December 23, 2011

Why Invest Young?

If you ever talk to an established investor, they will most likely agree that the earlier you invest your money, the better. Believe it or not, investing at a young age is one of the best ways out there to secure your financial future. Also, investing when you are young is the best way to save up for retirement. While you may think you are too young to be worrying about your retirement, the best time to start saving up when most people think they are too young, even if you do not have a full time job yet.

Take Advange of Compound Interest:
The historical average for the growth rate of the stock market is about 10% per year. This means that if you start your investing in a mutual fund that mimics the market (there are a ton of them out there), you will get an average return rate of 10%. While this is the easiest way to invest and get a sizeable return, you can earn much much more by building up your own portfolio of individual stocks.

Let’s say you are 20, and you are thinking about retiring when you are 60:
If you invest $10,000 at the start and earn a 10% yearly return, you will have $452,592 when you are 60. Remember, that total is without adding at all. If you invest smart and add an additional $10,000 every year at a 10% interest rate, you will have $4,878,518 after 40 years.
Let’s just stay that you are investing better than average, at a 15% return rate per year. With just the initial $10,000 investment, you will have $2,678,635 by the time you reach retiring age. If you manage to supplement this investment with an additional $10,000 per year at a 15% rate, you will end up with a whopping $20,469,538. That is enough money to live an extremely comfortable lifestyle in retirement!
As you can see, the magic of compound interest is a very good reason to start investing your money at a young age. There are, however, indirect ways that investing young will be beneficial to your financial life.
*You Further Your Investing Education
One thing that most people will agree on is that the more you do something, the better you get at it. In my opinion, this is the most important reason to invest young. Putting your money in various investments at a young age allows you to learn the ins and outs of the investing world; putting you way ahead of the game.

In the end, if you or one of your peers is ever asking "Why should I invest young?", ask "Why not invest young?" By setting aside only a small portion of your savings into various investments, you will learn ways to be to make money and stay out of financial trouble for the rest of your life.
Do you know any other solid reasons why someone should invest young? Perhaps some reasons not too? I would love to hear them in the comments below!

Tuesday, December 20, 2011

Welcome to my Blog!

Hello internet! My name is Alan Parker and I am a young (17 years old) investor, student, athlete, scholar, photographer, and starting now… blogger. Since 2009, I have invested my money in stocks and have gotten a marvelous return, in both capital and knowledge. I would like to gain even more money and knowledge in future years, and on the way would like to share my knowledge with others like me through my blog, Invest Young.

My goal for blogging is to share my both my experiences and the knowledge I gain from them with others, especially young investors like me. I plan on covering a wide range of topics all aimed at younger investors (by "younger investors" I mean investors who are still in school or are not holding a full time job). They will cover everything from making money to reading public company's balance sheets. Many people do not realize the benefits of saving and investing at a young age until later in their life. Hopefully, through my own experiences and advice, I will convince a lot of you guys to start saving and investing your own money NOW.

I plan on covering covering many topics; everything from "How to open a stock trading account" to "Saving money in college". I will talk about anything that I think will be useful to my readers, so if you want me to write on a specific topic, please say so in the comments below!
All feedback is appreciated! Please, if you want to let me know something or you have a question, leave comments below my posts. Remember, I am in this to learn as well as teach, and would love to hear any advice or critiques that you have for me. J