When seeking out simple investment options as a beginning to the art of investing, there are a few golden rules to keep in mind. It can always be helpful to take the advice and guidance of someone who is more knowledgeable when making investment decisions as a beginner. It can also be helpful to start small and, as Warren Buffett often says, "KISS" - or "keep it simple, stupid". Another important facet of approaching investment as a beginner is to drop the "stupid" part and remember that you are new to investing and have a lot to learn, and that is normal and to be expected. Luckily, there is a lot of information that is readily accessible via the Internet as well as an ever-expanding selection of brokerage and financial advising firms, and it can be as easy as the click of a mouse or a simple phone call to get started as a beginner in the world of investing. Learn from experts about some simple investment options for beginners and select the ones that sound like a good match with your investment interests and goals.
Investment basically refers to the willingness of a funder to spend money to purchase a certain type of financial holding in anticipation of future financial gains on the investment made. When you invest into a company, for instance, you do so because your research indicates there is a greater likelihood of financial gain from investing there than from another type of investment option. Because various investments involve various amounts of risk as related to the potential for a greater financial return on that investment, it is important to take care to balance risk and return when entering into the investment arena.
Many employers offer 401K programs, employee stock programs, and other programs designed to help employees financially plan for the future. Human resources professionals and financial advisors that work with employers can provide valuable guidance and suggestions free of charge.
Bonds are what are termed "fixed income securities". Bonds are a form of credit extended from investor to the issuing company. Bonds have a fixed maturity date and the investor will receive interest payments at regular intervals until the maturity date, when any remaining earned interest plus the original value of the bond will be returned to the investor. The investor gets a low risk investment option that offers a low, consistent rate of return.
Stocks are a less stable but more potentially lucrative investment option. Like bonds, stock purchase signifies investment into the future wellbeing of the company, and stockholders buy their right to vote on issues pertinent to the company's success and share in that success financially.
Mutual funds fall in between stocks and bonds as a median risk, median return investment option. Each mutual fund is a collection of various bonds and stocks, and the investor buys into the mutual fund and shares in the profits or losses according to the proportion of investment made.