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Your Guide to Investing for the Future

Jul 1, 2008
The best suggestion that you are going to hear over and over again when you are contemplating the investing of your hard earned money is that it is never too late to start investing and secondly there is no ideal scenario, instrument or product to invest. It all boils down to a few factors that I am going to talk about in this guide to investing for the future.

The first and the foremost thing that you need to sit down and ponder over your goals for the future. These goals are not your career goals but your goals for the financial future. Usually you would think of a few things that you need money for. The list of things could be endless but a few things are of rime importance that you cannot ignore and the first one is your financial needs after your retirement. You will not have a regular monthly paycheck to fall back on when you need to retire so think about how much would you need for the retirement life about 30 years. That money which you need then has to come out of your current salary.

The next most important thing in those financial goals should be your kids education and marriage if you are married and have kids or planning to have kids. With college education being expensive it is better to think about it now.

The other part of the financial goals can be the short term goals like paying for your home mortgage or buying an expensive car. There are different set of investment vehicles for investing in short term. If you are investing for less than one year then you are better off having a certificate of deposit at a local bank or some money market savings account. That way you do not have the risk of losing money which is required for your immediate needs.

For long term investments open a brokerage account with an online or an offline brokerage firm. For long term another investment is mutual funds with a company. For long term benefit also open a 401K or a Roth IRA. These are tax deferred instruments and the golden rule to investing in these is to contribute as much as you can towards these accounts and you will your kitty grow over time.

You will ask why to invest in stocks or mutual funds for long term plans and why now and why not after retirement. The simple reason is that if you invest $1000 now it will you will earn interest or some return on it in the next year.

For the next year you will earn the interest on the original $1000 plus you will earn interest on the interest that you earned the first year. This cycle will continue to grow till you retire. This is known power of compounding and is very effective when it comes to building that corpus of retirement money.
About the Author
Stock market for beginners guide is for people who are looking for stock market for beginners lessons on investing with a long term view of the market.
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