The market is crazy these days so trying to find the best way to invest money can be difficult. We are all at different points in our lives and we all have different situations so the options available to you will differ from the next guy. We will take a look at these options to help you determine which investment method best suits your needs.
Risky investments typically pay more than safer investments so young investors are very lucky because they can afford to take on extra risk. Should the investment go bad and the investor loses their shirt, they will have time to make up the income before they retire, typically 30 or more years later. Investing early can mean big returns come retirement.
Older investors cannot afford to be risky with their investments as they are close to, or getting close to, retirement. Older investors need to avoid risky investments like stocks because their volatility can cause them to lose a significant portion of their savings, especially if they are cashed in like a downswing that we are currently experiencing. Look for more secure investments like bonds and treasury securities as options.
Another factor you need to consider is the amount of money you make in a year, and how much you rely on for everyday living expenses. If you are heavily reliant on your day to day income, then you really should consider more secure investments, as you will have a more difficult time making up those losses in the future, whereas an investor that makes more money can afford to be risky because they would have an easier time making up big losses.
How much credit card debt do you have? Credit card debt needs to be a consideration as most investments normally yield a smaller return than the normal credit card interest rate. For example if you have a 15% credit card rate, investing in a security that returns less than 15% makes less sense than paying off your debt. - 16089
Risky investments typically pay more than safer investments so young investors are very lucky because they can afford to take on extra risk. Should the investment go bad and the investor loses their shirt, they will have time to make up the income before they retire, typically 30 or more years later. Investing early can mean big returns come retirement.
Older investors cannot afford to be risky with their investments as they are close to, or getting close to, retirement. Older investors need to avoid risky investments like stocks because their volatility can cause them to lose a significant portion of their savings, especially if they are cashed in like a downswing that we are currently experiencing. Look for more secure investments like bonds and treasury securities as options.
Another factor you need to consider is the amount of money you make in a year, and how much you rely on for everyday living expenses. If you are heavily reliant on your day to day income, then you really should consider more secure investments, as you will have a more difficult time making up those losses in the future, whereas an investor that makes more money can afford to be risky because they would have an easier time making up big losses.
How much credit card debt do you have? Credit card debt needs to be a consideration as most investments normally yield a smaller return than the normal credit card interest rate. For example if you have a 15% credit card rate, investing in a security that returns less than 15% makes less sense than paying off your debt. - 16089
About the Author:
Charles Johnson is a personal finance writer for PE Financial Services. Visit PE Financial for articles on investments, loans, insurance, and the best way to invest money in this difficult economy.