How to Invest Your Money

Comments (20)

Think carefully on how to invest your money because if you make wrong decisions it could cost you dearly. There are many ways in which to invest your money and as such seeking the advice of a professional would be a very wise move. The information below will help give you a better understanding of some key elements of managing money:


Your "savings" are usually put into the safest places or products that allow you access to your money at any time. Examples include savings accounts, checking accounts, and certificates of deposit.

Most smart investors put enough money in a savings product to cover an emergency, like sudden unemployment. Some make sure they have up to 6 months of their income in savings so that they know it will absolutely be there for them when they need it.


When you "invest," you have a greater chance of losing your money than when you "save." You could lose your "principal," which is the amount you've invested. That's true even if you purchase your investments through a bank. But when you invest, you also have the opportunity to earn more money than when you save.

All investments involve taking on risk. It's important that you go into any investment in stocks, bonds or mutual funds with a full understanding that you could lose some or all of your money in any one investment.


It is true that the greater the risk, the greater the potential rewards in investing, but taking on unnecessary risk is often avoidable. Investors can best protect themselves against risk by spreading their money among various investments, hoping that if one investment loses money, the other investments will more than make up for those losses. This strategy, called "diversification," can be neatly summed up as, "Don't put all your eggs in one basket."

Once you've saved money for investing, consider carefully all your options and think about what diversification strategy makes sense for you. There are quite a few investment products to choose from for example; stocks and shares, stock mutual funds, corporate bonds, bond mutual funds and money market funds.

Diversification can't guarantee that your investments won't suffer if the market drops. But it can improve the chances that you won't lose money, or that if you do, it won't be as much as if you weren't diversified.

Risk Tolerance:

What are the best saving and investing products for you? The answer depends on when you will need the money, your goals, and if you will be able to sleep at night if you purchase a risky investment where you could lose your principal.

You may freely reprint this article provided the author's biography remains intact:

About the Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the website.


Razerk 08.04.2009. 12:49

How can I effectively invest money and make a profit of it? how can I effectively invest money and make a profit of it?thank you very much for your comments and suggestions.


Admin 08.04.2009. 12:49

There is no safe way to invest money and make a large profit. Investing comes down to weighing your tolerance for risk -- the more risk you can take, the better chance you have of making more money. So it basically comes down to how much money you have, how much you can afford to lose if things go wrong, and how long you have to invest it. Another thing to consider is if you have any other money invested; if so, you probably want to diversify and pick something unrelated. If you already own stocks, for instance, you should buy different types of stocks, or real estate, or bonds, or commodities...

I'm going to guess that you have a relatively small amount of money to invest, say $10,000, that you would be upset if you lost more than, say, $2,000 in a given year, but that you're not going to need to get at the money quickly. If these sound roughly like your circumstances, I'd suggest putting $4,000 in an FDIC-insured 1-year CD and using the remaining $6,000 to buy a mutual fund or ETF that tracks the S&P 500 index. (Be careful when picking mutual funds -- look at the percentage fees they take out to manage the funds, and any brokerage charges you pay to buy them. These can seriously eat into your profits and deepen your losses.)

For most investments -- anything riskier than a bank account -- you are going to have to work with a brokerage firm, and your transactions will be handled by someone who, by law, is licensed to advise you about various aspects of investing. Talk to your stockbroker and don't be afraid to ask him lots of questions if you don't understand something. (But don't think of him as your friend -- he works for his employer, not you, and sometimes your incentives don't match. Don't make any decisions that you don't fully understand just because he said they'd be a good idea.)

If you earned the money you're investing (as opposed to e.g. receiving it as a present), and you want to invest for college or for your retirement, there are special types of accounts you can use for those purposes which give you a break on taxes. Taxes are an important consideration -- if you make a 7% return and pay 33% in taxes, you're really making less than 5%. At 7%, your money doubles in 10 years. At 5%, it takes 15 years. Perhaps these numbers don't sound so big, so make sure to stop and think about how long 5 years is.


Bomapo 06.03.2009. 14:26

Why is it important to invest money to grow over time for retirement? I have to write a essay and I am clueless about this topic. I'm supposed to tell why its important to invest money for retirement and why its important to diversify invesments among different asset classes. Can anyone clear things up for me?


Admin 06.03.2009. 14:26

I'll try my best. The earlier you are able to invest money, the better because it will have more time to grow (with interest). If you don't save for retirement, you won't really have much of anything for retirement. If you've ever done exponential growth equations, you'll see how true this is. If, for example, parents of a newborn baby invest $600 every year (that's $50 a month) in some sort of a savings thing that earns 12% interest annually, they invest this much every year until their baby is 21 and the person doesn't take it out until he's 65 he will have over 10 million dollars. Diversifying investments is mainly important because if one thing decreases in value or one company goes under, you won't lose everything. Hope that helps a little.


Josh 16.05.2010. 20:01

How can I learn how to invest money in stocks? I am turning 18 pretty soon and would not only like to be able to know how to invest money in stocks, but to also learn how to invest my money in general. Are there any good websites, books, CDs, ect that anyone could recommend for myself to get a leg up?

Any advice would be helpful also



Admin 16.05.2010. 20:01

I just wish I had asked this question when I was 18! You hit the nail on the head when you ask "how to invest my money in general". When you have an informed view on that you'll know whether to invest in stocks and if so, how.

I wholeheartedly recommend a book by Tim Hale, "Smarter Investing". When you have read it and applied the principles to your own situation, you will feel much more confident about what to do with your money, and how to preserve and grow its value over time (there are no surefire quick wins). You will also know how to save many times its cost - the financial services industry is a machine for transferring investors' money into the pockets of advisers, brokers and managers, and you need to know how they do it.

By the way, this is not a disguised advert - I have no connection with any vendor or the author of the book. Don't take my word for it - read the reviews.


sharon 28.06.2008. 04:37

What is the best way for me to invest money for short term profits? I have a 403b but I would like a somewhat safe way to invest money and get a return before retirement.Should I do stocks, bonds, CD's? Where is the best place to obtain these?


Admin 28.06.2008. 04:37

If you don't have the time or inclination to monitor your stocks carefully, go with mutual funds and the rest. It's important to diversify, especially in this economy. I'd recommend that you keep a significant percentage in cash (Schwab for example will give you ~4% on cash). Kiplinger is a trusted source and often has issues that pertain to specific kinds of investment, such as safe investing before retirement.


Aws 09.10.2007. 19:34

What is the best way to invest money- 100k$, long terms from 5-7 years? What is the best way to invest money- from 100k$ to 250k$, long terms from 5-7 years
And what?s the proximately profit yearly
thank you
I need to invest with the best investment fund
I have my own businesses, I don?t have time to bay & sell shears I looking for best fund to invest my money long term


Admin 09.10.2007. 19:34

Identify yourself as what type of investor are you. If you fall under aggressive category, you want to invest 80% in stocks and 20$ in bonds/CD/money market funds.
Invest in index funds 1/3 starting from Dow30, S&P500 Index, Russell 2000 and International (Morgan Stanley) Index funds. You will cover the entire stock market and won't regret it. If someone tells you to buy Google or Apple, think twice. They are good stocks but also have very high Price to Earning ratio. You should expect somewhere in the range of 5-10% return per year.


B 28.07.2008. 15:17

How do you invest money in stocks like what steps to take? How do you invest money in stocks in what are the steps to take like how much money to start off with in who should I contact to talk about investing


Admin 28.07.2008. 15:17

There is no set minimum amount of money needed to start investing. Yes, many broker firms have minimum deposits, but there are some out there that do not have any minimum requirements at all. I currently use Firstrade and they do not require any minimum deposits. However, I do think that you need some amount of cash or else your commission costs will be eating away your profits. On the other hand, knowing that you are a first-time investor, I would discourage you from investing too much money to avoid great losses. Test the water. Gain some experience before jumping in. To start investing, pick an online brokerage firm and contact them. If you want to learn more about Firstrade, you can visit their website:


hieishin88 16.04.2010. 03:21

What is something safe i can invest money in that will make the money grow substantially? What is something safe i can invest money in that will make the money grow substantially? is certificate of deposits one?


Admin 16.04.2010. 03:21

You need to be more specific with exactly what you mean by safe and substantially. If you truly want something safe than US Treasuries are for you. If you want something that will grow your money then you should explore equities or corporate debt. If you choose to go with corporate debt then make sure that you are investing in investment grade securities.

Another option for you, if you do not have time to actively manage a portfolio and assuming you think the market is going to continue to trend upward, is an ETF that tracks an index such as SPY (which tracks the S&P 500). Check the Yahoo Finance ETF page to find one that suits your needs. If you feel like that may not be for you then you might want to explore mutual funds also.


AmDenTo 28.07.2008. 20:31

Is there anything on the internet where you can invest money? Im looking for something when you invest money and you get something like %20 of what you invested each month?


Admin 28.07.2008. 20:31

There's no tooth fairy, no santa claus & no 20% a month. Anyone who promises you 20% a month is planning to run off with your money.


Josh 16.05.2010. 22:27

How can I learn how to invest money in stocks? I am turning 18 pretty soon and would not only like to be able to know how to invest money in stocks, but to also learn how to invest my money in general. Are there any good websites, books, CDs, ect that anyone could recommend for myself to get a leg up?

Any advice would be helpful also



Admin 16.05.2010. 22:27

I would suggest "The Intelligent Investor" by Benjamin Graham. This is used as a college text book in courses on security analysis. He also wrote another text book on the same subject with a different approach with a man whose name was Dodd. I would also suggest that you read the weekly newspaper, Barrons or the daily Wall Street Journal. They are available at the public library for free. You might also wish to study Value Line Services in the reference section of your public library. This is updated weekly. Oh, by the way, I believe that according to Federal law, you will not be able to trade until you are 21.


kiran 25.07.2008. 19:03

How can i invest money in india from another country? I want to invest money in india(like gold ETF's ,mutual funds,etc). But i live in US ,how can i invest money from here?can anyone please tell what are the best ways i can invest money in india and also the options(other than gold etf) where can i invest money in india?


Admin 25.07.2008. 19:03

You can invest in ADRs here in the US. But to trade directly in their markets you must contact a broker who can do this. There are numerous tax considerations when trading outside the US which is one reason ADRs are an attractive alternative, coupled with the fact that they also require no special treatment. They are traded on the regular exchange.


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