The following is some detailed investment advice for specific areas. This can help one to get an idea of what the options are as well as give a general idea of pros, cons and risks. While this advice is based on sound investment principles, it should only be used as a starting point. Once a person has decided to invest in one or more markets, it is wise to look up detailed information on the market in question.
How to invest in stocks
Stocks are generally purchased through a broker but you can buy them on your own via either a dividend reinvestment plan or a direct stock purchase plan. However, it is usually better to buy stocks via a broker as it is less risky. Stocks represent a portion of a company. By becoming a stock holder, one will be able to vote on who will sit on the board of directors. One will then be entitled to a portion of the company’s profits.
There are various types of stocks but they generally fall into two categories: low risk stocks and high risk stocks. High risk stocks can be more profitable but there is also a high risk of losing money. It is generally wise to create an investment portfolio with a mixture of both low and high risk stocks. A wise investor will also do extensive research before buying stock in a company. Choose a company whose profits have been rising on a regular basis. Keep tabs of how the company is doing; you may need to sell the stock off at any given moment if the company seems poised to take a nosedive.
How to invest in Gold
Gold is a precious metal whose value has endured for millennia. While the price of gold fluctuates, it has always been valuable and probably always will be. Gold is a wise, safe investment to make. Choose gold coins that are known the world over; some good options include the American Eagle, South African Krugerrand and Australian and UK Sovereigns. See how much the coin weights (this is measured in either grams or troy ounces) and what the level of fineness is.
Gold coins should have a fineness level of about 917 out of 1,000. A viable alternative to buying a gold coin is to buy a bar of gold. These are sold at various stores as well as over the internet. However, it is usually better to buy gold bars in person instead of online. Make sure the seller is a reputable, honest dealer, check the weight of the bar and what its level of fineness is. Unlike gold coins, gold bars should have a fineness level of 999 out of 1,000.
How to invest in Silver
Silver can also be a good investment to make. Silver is not as expensive as gold. While the returns gained from silver investments will not be as high as gold investment returns, silver is a viable investment alternative for those who have a limited income. Silver bullion coins can be bought from a variety of sources but should always be bought in person from a reputable dealer. The most popular silver coins are the Canadian Silver Maple Leaf, American Silver Eagle, the Austrian Silver Vienna Philharmonic and the British Silver Britannia. Out of all these coins, the Canadian Silver Maple Leaf has the highest purity level at 99.99%.
The other coins mentioned above have a purity level of 99.90%. Wall Street Mint Bars and Sunshine Minting Silver Bars are also good investments. Alternatively, one can invest in antique silver items as opposed to silver coins or bullion. Antique silver items are a wise investment as the price is almost certain to rise with age. Antique silverware and ornaments can be bought via various certified antique dealers and should always come with a certificate of authenticity. Both the weight and the purity level of the silver should be written down. Note that antique items will have a lower purity level than either bullion or silver bars, as other metals must be used to shape the silver.
How to invest in Real Estate
Despite the downfall of the housing market in 2008, real estate remains a viable investment option. In fact, there is no better time than the present to invest in real estate, as both prices and interest rates are quite low. Find a state where real estate prices are steadily rising and invest in a house, apartment or condominium in such a state. If you are new to real estate investment, then hiring a real estate agent can be a good idea and is certainly worth the cost.
Real estate agents have a list of houses for sale that is not available to the general public. This list is known as the MLS and can offer some good buys. An alternative is to attend housing auctions. Houses that are foreclosed on are often put up for auction by the bank that was holding the mortgage. In many instances, the bidding starts quite low and it is possible to buy real estate at bargain prices at a real estate auction. Yet another alternative is to buy an empty lot and invest in building a house, office building or apartment complex. However, while this latter option can be quite profitable, it also requires a large expenditure of time and energy.
How to Invest in Oil
Oil can be a highly profitable investment. It is in high demand and many analysts predict the price of oil will rise in the coming years. However, investing in oil can be risky. Many investors lost a lot of money when the price of oil went down by over 75% a couple of years ago. While there are several ways to go about investing in oil, the simplest and least risky method is to purchase an oil ETF (exchange traded funds).
There are about a dozen ETFs, but some of the most commonly known ones are the US Twelve Month Oil Fund ETF, the US Short Oil Fund ETF, the DBO Power Shares DB Oil Fund, the ProShares Ultra DJ-AIG Crude Oil ETF and the ProShares UltraShort DJ-AIG Crude Oil ETF. Investing in an oil fund or directly into an oil company can also be wise; however, a first time investor will want to start off with investing in ETFs and then diversify his or her investments from there.
How to invest in Bonds
Bonds are in many ways a lower risk investment than the stock market. For this reason and other reasons, many investors opt for an investment portfolio that contains both stocks and bonds. Bonds are loans taken out by either a government or company. You are in essence loaning money to an institution; this money is then repaid with interest. Many consider this investment to be a source of fixed income. Unlike the other investments mentioned above, bonds provide a steady rate of interest.
The money generated is not subject to market conditions, how well a particular company such as Blue Sky is doing or when the bonds were purchased. However, the income that is provided is not particularly high, as the principal is not paid back for many years. Purchasing bonds is fairly straightforward, as you would not need to go through a broker. However, you should familiarize yourself with the par value (i.e. the amount of money you are loaning a company or the government), the coupon rate (aka interest rate) and the maturity rate (when the principal and interest will be paid back). These rates vary depending on which bonds were taken out.
How to invest in Mutual Funds
Mutual funds are perhaps one of the riskiest investments that one can make. You will need to start by choosing a brokerage firm and sales representative. After this, you can make an initial investment decision as to which mutual funds to invest in. Be prepared to pay annual management fees to the brokerage firm who is handling your mutual fund investment. The tax rate on mutual fund returns can be quite high, although the exact rate depends on which state you live in and your total yearly income. You can also invest in mutual funds over the internet, if you have an account with a bank that handles these types of investments.