Investment 101

Investing is one of the most basic and fundamental concepts of our economy, yet it can also be the trickiest and most confusing aspects. Investments can occur at various levels of the economy and carry different levels of risk. For example, individuals putting money into a mutual fund is investing in their futures and a company that is appropriating funds into acquiring another company is investing in the future and potential growth of the company. Although investing can take many shapes and forms, the most important investment is most likely the ones that directly affect an individual and his or her family. Even on an individual level, knowing how to invest and what to invest in can be a bit complicated; it is important to know where to go for accurate investment advice.

The first step every individual should take when starting their investment journey is to make sure that you are enrolled in your company’s 401(k) plan, if your company has one. The 401(k) is not actually an investment- it is simply a type of account in which to hold your investments, such as mutual funds, stocks, bonds, and cash.

The beauty of the 401(k) plan is that it gives the individual the ability to deposit investments and money without having to pay any taxes on it (taxes are added once the individual wants to withdraw the money, usually during retirement). This means that the individual can continue to deposit money and grow that specific nest egg for years and years without getting taxed over it. If follows from this that in order to maximize the money and investment storing potential of 401(k)s, you should always remember to max out your IRA contribution limits whenever you can.

Investing can mean more than just simply storing money in accounts and investments; buying a house or other dwelling is also considered a type of investment. To put it bluntly, people who

have been renting for years and years have quite simply been giving their managers/landlords the money they could have been using to invest in a permanent dwelling; renting an apartment or house makes sounds fiscal sense in temporary or the most dire of situations. With the economy where it is these days, it is truly a buyer’s market for potential homeowners- real estate prices are at low levels that haven’t been seen in years and as sellers become more and more desperate to sell, the lower and lower their asking price will get.

There is more to investing than simply obtaining a 401(k) and purchasing a house, but each individual should keep in mind that not all investment advice will apply to them. Since each individual’s values and circumstances are unique to them, the only way that they can ensure that they will be smartly investing their hard-earned money is to research investment tip websites and read any investment newsletter that comes your way.

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