Investing 101

If you don’t see a big pension income in your future, you should learn a little about investing (beyond just savings accounts and CDs). Here is a guide for what you should know to help take control of your financial future.

• Pay off high-interest rate debt, such as credit card debt first.
• Have a fully loaded emergency fund.
• Understand that when you invest, sometimes you’ll lose money — the stock market fluctuates (think long term).
• Know what portion of your portfolio each holding represents and notice as the proportions change.
• Plan to live without any of the money you invest in the stock market for at least five years, if not 10 or more. (Again, think long term.)
• Understand the difference between a balance sheet and an income statement — and know where to find them.
• Realize that it’s much more important to understand and follow a business than to just follow stock prices each day. (After all, you’re buying part of these businesses.)
• Have a long-term investment horizon, aim to hold on to your stocks for years, as long as they remain healthy and growing.
• Compare your performance to a benchmark such as the S&P 500 index.

You can read more about each of these tips, and get a checklist for investing, in The Motley Fool’s full article “How to Invest — in Stocks, Bonds, Retirement Accounts, and More.”

Credit to:
The Motley Fool
How to Invest — in Stocks, Bonds, Retirement Accounts, and More Investing in stocks and bonds is easier than you might think. Here’s how to get started and some investment strategies to consider.
By Selena Maranjian, May 6, 2018