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Investing Your Money

Investing your money is a critical part of planning your financial future, but it does involve risk. The more educated you are about how investments work, the better the chances are that you will make decisions that are right for you. There are many ways to invest and many professionals and firms to help you make these decisions. There are also ways to evaluate the quality of people and firms that provide investment advice. Basic information to get started is provided below along with some helpful links.

Basic Investment Advice

Here are some suggestions on how to be a smart consumer:

  • Start small. Rather than looking for fast money, try to make small gains. When you get a little more experience, move up to higher profile stock or mutual funds. Consider carefully consulting with professionals, and seek more than one opinion.
  • Diversify. That is, spread your money out. Try not to put all your money in one market. If, for example, the technology sector takes big losses, you will be protected by having some money in another sector, such as retail or manufacturing.
  • Understand mutual funds. Most mutual funds are supposed to generate growth over time and thus are geared toward long-term investors, not day traders.
  • Information is power. You can never have too much information about a company that you are interested in. If you invest in a company but don't know what they're doing, you could lose a major part of your investment. Some Internet sites and online brokers have research available for you; you can also check out the company's website.
  • Don't forget about commissions. The fees that you pay to your broker can eat up a significant portion of your returns. When determining how to invest, consider options with low fees.

Source: Investing Online Resource Center

Investment Advisers: What You Need to Know Before Choosing One
The United States Securities and Exchange Commission (SEC) receives many questions about investment Advisers what they are and how to go about choosing one. The SEC has prepared a series of answers for some of the typical questions they receive from investors about investment Advisers. This Q&A, developed by the SEC, is for the benefit of investors. (You should not rely upon it to determine if you need to register as an investment Adviser.)

Protect Your Money: Research Brokers and Advisers
Federal or state securities laws require brokers, advisers, and their firms to be licensed or registered, and to make important information public. But it's up to you to find that information and use it to protect your investment dollars. The good news is that this information is easy to get, and one phone call or web search may save you from sending your money to a con artist, a bad broker, or disreputable firm. Use the link below to help.

Terms to Know
Certificate of Deposit
A low-risk investment you make at a bank for a fixed period of time. Interest is much higher than a passbook savings account, but you will be penalized if you withdraw your money before the term of the deposit is completed.

A share of ownership in a corporation.

A share of a company's profits paid to those who hold stock in that company.

A loan made by an investor to the government or to a corporation, which is paid back with interest at a fixed time. Bonds are generally lower risk investments than stocks.

Mutual funds
A portfolio of stocks, bonds, cash, and other investments. These investments are bought and sold by a professional manager, so the risk is generally lower than that of an individual stock. Mutual funds are categorized according to how risky they are and how quickly they grow.

A professional who buys and sells stocks for you.

The amount of money you pay to a broker to carry out a transaction.

The risky and difficult practice of buying and selling stock constantly on the basis of small, short-term gains and losses.

Additional Information You may wish to review additional information about investment your money and related financial topics.

Financial Education Resources