You were talking with friends at dinner the other night and you listened intently as they described how they made thousands of dollars in the stock market today. Well that would get my interest too, but you will find more people losing money in the stock market than making their fortunes, especially thos who are beginning investing in the market. That is if they are truthful. The main reason is they are buying hype and a story, when in fact what you really want to invest your money in is the company and their earnings, their plan to increase those earnings, and how well they performed in the past. Sounds like a lot of research doesn’t it? It is Investing is not a get-rich-quick scheme, but rather a process that favors educated and patient investors who value the long-term. Stocks can offer the best returns on your money if you invest wisely and use common sense.
Mutual Funds are still the best vehicle for beginning investors. Mutual fund investors receive the return earned on the holdings in the fund’s portfolio less any fees or expenses, but before investing in any mutual fund, ask for and obtain a prospectus. Mutual funds are required by law to provide prospectuses. Mutual funds are no different than any other investment; before you invest, you must know invest your own investment goals and objectives. Mutual funds offer another alternative to investment. Fund managers just don’t go out and pick investments with your money out of a magic hat. They are professionals and this is their business. Although you may not know them personally, they are handling a personal product on your behalf, your money. Checking their track record BEFORE you send your check is imperative to preserving your investment capital and helping you to sleep in peace at night. Fund shares can be bought either through a brokerage firm or directly from the fund itself. Investing through the fund itself will usually save you some money in commissions, but that is not always the case. If all this sounds confusing, it is supposed to. You are a beginning investor, you will learn more and it will start to make sense. Now why do we say mutual funds are a great place for the beginning investor to start? The answer is very simple. They limit your risk and you can still enjoy a handsome reward.