You need the best investment guide you can find in this bad economy and difficult investment environment. You will also need a good investment guide for beginners to navigate the rough waters ahead. Investing has never been more difficult or confusing. It's time to learn how to invest and here we show you how.
First, you will need to familiarize yourself with the investment universe, including the investments you already have. This is not that difficult if you have a good investment guide, as there are only 4 basic investment alternatives. Second, you will need to learn how to invest and come up with a solid investment strategy that works for you through the good times and the bad. That's what a good investment guide for beginners can do for you.
In other words, learning how to invest successfully for the long term is a two-step process. Skip step one and you won't understand step two. Without step two, you won't be able to put the investment knowledge you learned in step one into practice. At first I said that now is a difficult time to invest. Now I'll back you up with my 35 years of Millat Investments experience, in terms of the 4 basic investment alternatives available to all investors. Consider this a mini investment guide and a wake-up call. Investing for beginners is not a picnic today.
Your 4 basic investment alternatives in order from safest to riskiest: safe investments, bonds, stocks and alternative investments. Safe investments, such as bank accounts and money funds, pay interest and currently do not pay much. The score at the end of summer 2010: 1 year. CDs less than 1% and money funds less than 05%, or one twentieth of 1%. This is not normal and is actually very scary. The government can hardly lower rates to stimulate the economy as it has in past years. We are already looking for zero interest rates in money markets.
In order to earn higher interest income of 3% or more, average investors are transferring money to bonds in the form of bond funds, which are not really safe investments. Simply put, when interest rates go up, the value of bonds goes down. That's a basic investment fact you can count on: interest rate risk. If you think interest rates will fluctuate as usual and rise in the not too distant future, then bonds aren't exactly a great investment alternative right now. With two down and two remaining, we move on to riskier options that involve taking ownership risk to get higher returns.
Any investment guide for beginners can point out that, on average, in the long run, stocks have returned about 10% a year. The problem is that during the last 10 years the average investor would have done better with their money in safe investments in the bank. And for the last 3 years, a loss of around 10% per year was common for stock funds investing money for millions of average investors. Investor confidence in the economy and the stock market is not high as billions of dollars are being pulled out of stock funds and moving elsewhere (such as bond and money funds) in search of greater security.
In the past, when uncertainty was high and confidence in the stock market was low, smart investors would turn to other (alternative) investments like real estate to find opportunities. That has been a problem this time, because the financial system seems unable to get the traction it needs to get things moving again. High unemployment will not go away and millions of mortgages are "under water" as people decide to simply walk away from their financial obligations. Gold and silver have performed well compared to other investment alternatives. If history is a guide to investing, that's not exactly a lighthearted note. People buy and treasure gold in times of fear and despair.
Of our 4 basic options, none seem like a great BUY opportunity. Some of the best minds in the world of investing are suggesting that investors should start to see the investment game differently and lower their expectations. I suggest you start with the basics and snuggle up with a good investing guide on a rainy day. Next, you'll want to follow up and learn how to invest with a written investment guide for beginners. Once you start catching up, you might even start enjoying the challenge. And make no mistake about it ... investing today is challenging.
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