I have reached that point in life where I want to become a little more adventurous with investing. Reading through the available investments, many of the rates are still too low to realize a real gain on anything really. As it goes, the longer you invest your money, the better and higher the return. Which is fine, but unless you have large sums of cash to invest, your return can still be pretty disappointing.
As many women (there goes my male friends rolling their eyes again), I am risk averse. I tend to play it safe, wanting to invest in those classes of securities that promise a modest return, the kind that really fails to help you save for any major goal, unless of course you're willing to leave that money untouched for a few decades. The challenge is to find a short-term investment that will provide a sound profit when I cash in. The problem is that profitable investments are not only long term, such as retirement and college savings funds, but come with penalties if you try to withdraw the money prematurely.
Researching different types of investments, I was surprised to learn just how misinformed I really am about investing in general. This after all those years in business school and an advanced degree as well. The naïvety stems mainly from my need to play safe, but also from not devoting enough time to personally learn about investing. As many consumers, I had come to rely on second-hand information or large-font captions from advertisements. So now I am making it a personal goal to learn about investing through my own research and inquiry. Here's what I have learned so far:
1) There is no standard investment strategy. What works for one investor will not necessarily work for you. You have to set and evaluate your own goals and then invest accordingly.
2) Although financial advisors serve a purpose, their advice is just that, an opinion based on their professional judgment, education, and their inherent risk preferences. They're human beings who are prone to making mistakes, so keep that in mind when consulting one.
3) Do your own research. Make it a priority to learn the options available. The financial scandals of the past 13 years have created new standards and laws for information sharing. Investing companies are now required to educate the public on any matter pertaining to finances. Log on to any financial website and you will find links to additional sites that help navigate consumers through the world of investing.
4) Take baby steps. A small investment is better than no investment. Play it safe and invest low returns and if like me you're feeling a little risky, slowly move on to the riskier options. Just be sure that you're not tied down to long term investing that requires you to pay penalties if you change your mind along the way. Know that you always have a choice on how long you can invest.
These are a few ground rules to consider. Next post will have links to the different sites mentioned above and additional info I come across in my quest for liberating and independent investing.