If you are new to investing, you probably want to find a simple, easy to use strategy that will get you started without having to do a lot of research, learn complicated trading methods or start with a lot of money. The good news is that there are plenty of great ways to do this and I will share one here.
Before you get started, you need to understand what a mutual fund is. These popular investments are professionally managed, diversified pools of capital that invest your money based on the individual funds objective. Your dollars are combined with all other investors and the funds management team purchases stocks, bonds or other securities that meet its objective.
You receive shares in the fund and the funds assets are priced every day at the close of market trading. When dividends, interest and capital gains are generated by the fund, they are distributed back to every investor in the fund based on the number of shares that you own.
Your Investment Strategy: Keep it simple. Sometimes the best strategies are also the easiest to understand and implement. Start by selecting ONE high quality, no-load conservative, moderate or world allocation fund. These funds will buy a mixture of stocks, bonds and other securities that will provide a nice diversified portfolio to participate in the equity markets and provide downside risk protection. Many of these can be purchased for $100 to $250 and then you can make additional deposits whenever you chose.
Systematic Investing: If you are going to build your net worth and personal wealth, you should also make an effort to invest on a regular basis. This can be done by using a systematic investing approach that helps you to structure your investments on a quarterly, monthly or even a weekly basis. Try to establish an annual contribution goal and then divide it by your desired time frame. This will help you to structure a plan that will keep your investment program moving forward.
Automatic Accumulation: Your next step should be to find a way to make your systematic investments... automatic. This can be done through a payroll deduction, an automatic electronic transfer, a pre-authorized bank draft or by making a direct deposit manually. If you are serious, you should establish an automatic electronic deposit, because you will not need to take any further action and your investment program will be on auto-pilot.
Asset Allocation Strategy: As a final step, you will need to look at your strategy on a regular basis. I recommend quarterly. As your investments, net worth and personal wealth grow, you should eventually add some additional diversification to your program by adding one or more no-load funds to your portfolio. By adding a great bond fund and some international exposure can help your overall returns. When you add funds, you should also set up an automatic regular investment into each of the new funds as well. This will force you to keep savings and systematically expand your personal wealth.
Summary: Getting started in the investment world doesn't have to be complicated, expensive or take a lot of your valuable time. Just follow this short outline and you will be up and running quickly. Once your program is on auto-pilot, sit back and let it work. You will be pleasantly surprised by your progress when you sit down to review your investments 12 and 24 months from now. Small, simple steps can make a big impact on your bottom line.
To discover additional investment, financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.
About the Author:
Keith Maderer is a financial expert and has been a investment and tax adviser in the Western New York area for over 30 years. He is the owner of SENIOR Financial and Tax Associates and the founder of the Maderer Foundation, a private scholarship program.
Keith is also the author of "How To Get Your College Education For Less". Available on Amazon.com - ISBN No: 978-1-4538-2053-7.
You can get your FREE Wealth Expansion Kit, or check out his blog by visiting http://www.sftaweb.com/
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