5 Investment Strategies For Beginners

An investment strategy can be defined as a stratagem or approach that will help an investor select an investment opportunity (read stock) that has a good return on investment, or one that has proven to be a good investment opportunity. While most of the investment strategies for beginners will focus on tried and tested methods that have worked for others, by the end of the day, it always boils down to what the beginner investor can be able to work with to diversify their investment portfolio.

It is therefore correct to say that the many different investment strategies would cater to different investment needs. Some of the most notable investment strategies for beginners include:-

Define your Short term and long term Investment Goals

You cannot just wake up one day and decide that you want to start and grow an investment portfolio. You will need to sit down and do a critical investment goal analysis. This will help you determine the most ideal investment vehicle to board before you get started. With clearly defined short-term and long-term investment goals, you can then proceed to the next critical step and strategy for a beginner investor.

Choose an Investment Vehicle

Again, this is where you will need to sit down, armed with a list of your investment goals, and find an investment vehicle that will help you meet both your short-term and long-term investment goals. The best way to go about this point is to first decide on the type of investment that you want to do. You can decide to open a brokerage account, stocks and bonds, a college savings fund, 401Ks plans, IRAs, all these are investment vehicles that can help you achieve your investment goals. It is advisable that you only invest in something that you clearly know and understand. Thanks to the internet, you can be able to research and get useful information on a particular investment vehicle before you commit yourself.

Create your investment budget

Just like when doing your basic shopping at home, the only way you can get the most out of your investment is to create and set a budget for investment. How much money are you willing to invest in the stock market? This can help you determine the amount of money that you can afford to lose should the investment vehicle you choose fail you, as it sometimes will. Remember that an investment of any form is a risky venture, so you need to take your time to determine the amount of money that you can afford to lose without throwing you off balance.

Open a Separate Investment Account

After you have everything set and ready, it is time to open a separate investment account so as to keep good track of your investment portfolio. Besides, some investment vehicles, such as a 401K plan, or an IRA plan, is mandatory to have an account. Opening such an account is often a simple process that involves providing your personal information, signing an application form and transferring your allotted budget.

Learn about Investments

In order to diversity your investment portfolio and become a force to reckon with, you will need to take your time to learn as much information as you possibly can in regards to investments, especially on the investment vehicle that you have chosen.

This article has been written by Denis who is a contributor for where you can get some useful resources on ppi claims companies.

Dealing with Social Security Uncertainty

Recent reports published in Daily Finance suggest that the Social Security trust fund is going to begin its collapse around the year 2036. This means that you have about 24 years to adjust your planning and savings to compensate for this problem. This really is adequate time for most people to figure out how to make up the difference between what Social Security promises and what it will be able to deliver.

Tip #1 – Understand the Predictions

Before you panic you need to understand what the predictions about the Social Security trust fund are and how they will impact your retirement. First of all Social Security will still be paying out benefits after 2036. Chances are, however, that these benefits will be only about 70 to 80% of what is promised. If you are depending solely on Social Security as your retirement income then this is a bigger concern than if you were only depending upon it as a supplement to your other retirement income options.

Talk with Your Financial Advisor Now

The more time you have to make adjustments to your retirement planning the better your results will be. The best thing you can do right now is to meet with your financial planner or the advisor for your retirement plan. Talk about what you need to do to increase your final retirement fund balance so that it will cover what Social Security will not. When you talk with your financial advisor ask about your options and do not forget to tell him or her what your retirement goals are so they have a better idea about what strategies will work best for you.

Find New Sources of Retirement Income

For many people facing an uncertain financial future because of the problems associated with Social Security the idea of retirement is a fading dream. Many people will need to continue working well past retirement age to compensate for retirement fund scandals, financial hardships and other issues that have made saving for retirement problematic. If you enjoy work then finding a post-retirement position or business opportunity is not a bad thing, but an opportunity to have a second or third career.

There are many options that older adults have to make money during their retirement years. These options include acting as consultants to corporations, starting a new business and working part-time in a field that interests them. Finding post-retirement income will be a challenge, so it is important to start thinking of what you will do right now.

Citations:
  • Saletta, C. (2012). Ponzi scheme or not, Social Security can’t keep up the pace. Daily Finance.

J.R. Budnar, the author of this article, reports about about personal finances online.

Using Your 401k to Start a Business

Starting your own business allows you flexibility and control of your financial future.  While the thought of writing yourself a check from 401k funds to start a business may sound easy, there are several steps to consider while thoroughly reviewing the process.  There are tax penalties to understand and if your business doesn’t pan out as well as you had hoped, you could lose more than your retirement funds.

The use of additional resources such as a financial planner or a retirement plan administrator will help you review options.  You may have the option to roll over 401k funds into a corporate retirement account that allows you to invest in your business.

 

Because so many start-up businesses fail, many say it is not a wise decision to use retirement monies to fund your venture.  Evaluating your risks will help you make an informed decision on using retirement funds.

Review the amount you have in your retirement account and determine whether or not to use all funds or just a portion.  For tax purposes of for your business, it may help to have a separate account to utilize your funds once you obtain them.  This also allows you to keep track of expenses. Upon requesting your 401k funds, a portion may be set aside for tax withholding before you obtain the amount you are requesting.

Your business opportunity should be something you enjoy and have plenty of knowledge about.  Starting a business may be the best opportunity to reinvent yourself and want to make sure things are executed in the best way possible to increase chances of your business being successful.  Additional tips to keep in mind when starting your business:

  • Certain aspects of starting a business may become complicated and if it does don’t be afraid to consult a lawyer or financial specialist. They can assist you throughout your business venture by making sure tax information is correct and provide additional business advice.
  • If you start a corporation using existing 401k funds, penalties fees may be waived.
  • Understand your market by conducting plenty of research, especially during a slow economy.
  • Look into courses and classes available for entrepreneurs.  The Small Business Administration has a wide range of business resources available.
  • If other people are involved in your business that is employees, make sure they are aware of changes during the process.  Make sure you have good communication before and after the business gets up and going.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to tax reduction.

Why Look for a 401k Investment Advice?

Almost all people want to be secured when they retire from work. The 401k is one vehicle that can help you to be financially secure when you retire. This retirement savings plan is part of the US government program for employees to have savings that is tax deferred and could invest earnings in saving. The money or contribution are sponsored by employers wherein the workers choose to have a portion of their salary paid into their individual 401k account where it can grow until retirement.

The 401k retirement plan has a lot of good things to offer you. If you plan to invest, here is a 401k investment advice for you. You will have a few significant reasons why you must have this kind of retirement account. One is that you are going to have a significant tax advantage because the dividend, interest, and capital gains are not taxed until you cash out 401k. Another is, this account is flexible for investment for the reason that employees can choose from a range of choices as to how their assets are invested. If you are young, a 401k investment advice for you is to start your account right away because time is in your side. The longer the years you have your account, the bigger the investment you can get if you had not cash out 401k.

If there are benefits, surely there will be drawbacks as well, and the 401k is not exempted here. There are few things that one will always put in mind in order to avoid the consequences of these disadvantages. One rule is that the investor must not cash out 401k early or before he is 59 ½ in order to avoid penalties. These fees and penalties are very severe because it will include tax money plus the interest, and the worst thing that might happen is the forfeiture of your 401k account if not paid back. So, if you break this rule, you will suffer from penalties and fees that can ruin your investment expectation.

Therefore, it is important to know some 401k investment advice to help you in managing your 401k account. If you have any problem regarding how to work with your account, you can ask help from experts like a financial adviser. Doing well with your account today would be a huge money tomorrow.