Please find outlined below some tips for beginners who are looking to invest money.
How to start. O.K. so you want to start making by investing some capital to get a good return. First you’re going to need a financial advisor, right. Wrong! If you ever sit down with a financial advisor, ask them this question, how much money have you got? It’s a fair question. These people purport to know how to make you money; they should therefore have plenty of money themselves. If they don’t have loads of dosh, or they say it’s none of your business they’re in absolutely no position to offer advice on how to scramble eggs, let alone how you should put your money at risk.
That’s what you’re going to do, that’s what investing is. Taking money, placing it in the hands of others, and determining the odds on getting all that money plus a bit more back. By and large many investments are what is termed safe. Government bonds, bank interest etc. However there is still an element of risk. Don’t believe me, remember Barclay s bank, went under. Look at what’s happening with the sub prime lending fiasco now playing out. Who knows what institutions may go under because of this little escape into the patently ridiculous.
What you invest in is going to be largely determined by how much money you have to invest. If you are a save but only have a modest amount, managed funds may be the place for you.
Managed funds
Managed funds are basically big pools of money. A fund starts by a company seeking investors to place money into their pool. This money is then invested on behalf of the investors by the managers of the funds. By and large most funds are O.K. The funds can be very diverse in terms of their risk. The super safe funds investing in Bonds and Blue chip Stocks, offer lower returns, however also lower risk. Managed funds that invest in overseas markets and high risk ventures, can return a great rate, but because of the risk involved can go broke, taking your money with them.
The main problem with managed funds is the lack of control you have, and the fee structures that eat away at your profits. Fees differ across the spectrum of funds. There are a lot of managed funds out there, and the difference in performance may vary. This is the other great drawback of managed funds, choosing one. Don’t for Gods sake get a bank or other financial adviser select one for you. They may have a range of products available, however they certainly don’t have the full range, and they get paid by the product holder for every sale they make, which of course means you pay for it.
In my next article we will explore the stock market.
