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The Risk Of Not Investing

losing out on compound interest by not investingA lot of money can be made by investing and there are countless ways to invest your money. Of the options available, these are the most well known: stocks, bonds, mutual funds, and countless other alternative options. Before you start investing, you must know the differences between the options and what they mean for your investment. This will help you choose the way you invest your money. It would be a mistake to fail to understand the pros and cons of every option. It would also be a mistake to not invest in anything. Because of that, we will be giving brief details on each option but this is only a limited explanation of what each option entails. Be sure to do more research on the options that appeal to you.

Stocks

Stocks are a very common form of investment because it is so simple to purchase and sell stocks. When you purchase a stock in a company, you become a partial owner of the company. Stocks can quickly change value which is why they are constantly changing owners. Because of this volatile nature, they would not be the best option for someone who is looking for a steady influx of return on their investment. You are not guaranteed a return on investment when you purchase a stock and the only way to make money off of them is if they increase in value. Some stocks, but not all, pay dividends which are funds that the company gives to its owners. The dividend amounts vary but a little bit of research can show you the history of payouts by certain companies.

Bonds

Bonds are a much safer investment because you are guaranteed a return but it takes a long time for them to mature. The idea behind a bond is that when purchased, you are essentially loaning your money to a company or the government. When the bond matures, the company or government must pay the loan back with interest. This is a risk-free investment but the returns are not large either.

Mutual Funds

A mutual fund is a collection of both stocks and bonds that you purchase with a group of investors. All mutual funds are different and they vary based on what the goal of the group is. The benefit of this option is that you hand your money to a professional and they take care of the rest so you can have virtually no experience.

 

Alternative Options

There are so many alternative options that it is hard to keep track of them all. You can invest in real estate, you can invest in a single company by financing them, you can purchase stock options, or you can purchase futures. The list goes on and on and you can find a way to invest in any industry.
Always know where you are putting your money when investing. It might be easier if you hire a company that can help you monitor and keep up with what you have invested. One company that does this kind of work is Fortress Investment Group run by Pete Briger. Investing can be a very confusing industry because things change so often but do not make the mistake of not investing. You could really be missing out on extra money and there are options that prepare you for your future and retirement.
Image: Freedigitalphotos.net/Miles

 

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

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