Monday, August 12, 2013

Investment Options: Where To Put Your Money

That's right guys, I drew that by hand.
Disclaimer: This chart does not have every option in the world stated explicitly.

Read this if: 

1) You want to know about your different investment options. 

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Some people who want to invest have a hard time starting because they think it's really complicated and that they'll never be able to pick what to invest in. The good news is, there really aren't that many types of options. The bad news is that there are still a lot of different things to choose from in each type (for example, picking individual stocks can be a headache), but it's ok. Let's go over what "types" of investment vehicles you can get first. 


NOT Funds 

As you can see from my awesome flowchart, there are basically two types: funds and things that are NOT funds. Individual stocks, bonds, and cash-equivalents (e.g., a savings account, which still earns interest) are not funds, but they make up funds. Stocks are riskier than bonds, which are more risky than cash. 

Funds


The types of funds I listed are made of stocks and bonds. Mutual funds and index funds are basically the same thing, but index funds follow a passive investing strategy that leads to lower costs. A life-cycle fund changes what it invests in based on how much time you tell them you have until you want to use your money. For example: If I have a 2045 lifecycle fund, that means I don't plan on cashing in until the year 2045. That means currently, it probably has about 80% of my money in stocks, but over the years as we get closer to 2045, more and more money will get shifted to bonds (which are safer). 


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Plan of Action: 

1) I suggest funds for beginners and people who don't want to do too much research about what to invest in. Go to the website of any major brokerage firm and check out their different investment options. 


Questions about these options I described? Let me know in the comments. 

As always, contact me with questions or suggestions! You can either comment directly on the post or send me an email to moneymattersjoan@gmail.com

1 comment:

  1. Basically any website where you can buy and sell things like stocks and mutual funds is a broker. Examples that are super prominent are Vanguard, T. Rowe Price, E*Trade, Scottrade...I could go on for, like, a minute.


    Thanks for reading! :D

    ReplyDelete