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Starting down the road to your financial future can be fraught with peril.  If you don’t know what you’re doing it’s all too easy to lose your shirt in the process.
With the instant access of sites like ETrade, everyone fancies themselves a financial expert.  But the sad truth is that most of us go into investing our hard-earned money without the slightest idea of what we’re doing, which can lead to disaster.  On the other hand, with all the recent scandals involving investment scams (Madoff, anyone?) you’re not entirely comfortable turning your retirement fund over to the care of a person you don’t know and trust (no matter how good the returns they’re guaranteeing).  So what can you do?  You don’t want to entrust your money to a stranger, but you don’t have the slightest idea of how to proceed.
Luckily, the pros can help you. Â By following some of the smart investing tips that have gotten professional investors and consultants where they are today, you can quickly get your money working for you and secure your financial future. Â Here are a few hints.
- Roth IRA.  Regardless of your age, starting a Roth IRA is a pretty good idea.  In fact, the younger you are, the better, and there are two reasons.  The first is inflation; by the time you reach the age of retirement the money in your 401K just won’t be enough to support you in the manner to which you’ve become accustomed as a working adult.  Secondly, Roth IRAs have compound interest.  That means a person who donates from the age of 25-35 will end up with the same amount of money as a person who contributes from the age of 35 to retirement (all things being equal).
- Real estate.  If you’ve got a steady job, good credit, and some money burning a hole in your pocket, one great place to invest it is in property.  Now is the perfect time to buy your first home, get a second home to rent out, or even buy commercial property in a busy retail area.  With housing prices bottomed out, interest rates incredibly low, and banks just starting to loosen up on giving loans (especially to qualified individuals with some equity already under their belts), you only stand to gain from such an investment.  As a caveat, you shouldn’t do this if you’re looking to flip – this is definitely a buyer’s market.
- Diversify.  You’ve probably heard that you should have a diverse portfolio.  What does this mean?  Basically, don’t put all your eggs in one basket.  By building a diverse portfolio of stocks, bonds, mutual funds, forex, and so on, you stand to earn more overall while mitigating your risk of total loss.  Even if one area (like high-risk stocks) is losing, you’ll still have plenty of money to play with.
- Be smart.  If it sounds too good to be true, it probably is!  Madoff was giving 10% returns, year upon year, no matter what other investment firms were doing.  People speculated how this could be so…turns out it couldn’t.
- Invest in yourself.  Going to school, starting a business, or basically putting money towards the pursuits that you’re passionate about cannot only help you to earn down the road; it will also make you happy.  And when it comes to investing your money wisely, you should always keep in mind that you can’t take it with you.  You should certainly plan for the future, but don’t be afraid to have a little fun along the way!
Mike Thimmesch writes for Totally Money where you can find out how to get unsecured loans and browse through different options for cheap loans.
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