There are hundred's of investment books out there! But they are rarely written in a 'plain english' way. Are you from the US or UK? Pro's and Con's - what you really need to know about investment. The most common investing mistakes - what these are and how they can be avoided to increase success. Confusing financial products - follow the author's guide through the maize to find an investment solution that's right for you. Useful free investor tools - you too can find out what these are and why they are so important!
Investing in - find out about the author's favourite sectors for investing today. Most people don't want to think about retirement planning From the author: "You can take a look at the way I have put together a logical retirement plan I'm going to reveal all about this in Chapter 14, Scroll up and grab a copy today! Get A Copy. Kindle Edition , pages. More Details Friend Reviews. To see what your friends thought of this book, please sign up.
Lists with This Book. For more than a decade, Hogan has served at Ramsey Solutions, spreading a message of hope to audiences across the country as a financial coach and Ramsey Personality. Hogan challenges and equips people to take control of their money and reach their financial goals, using The Chris Hogan Show, his national TV appearances, and live events across the nation. Back Home. Back Get Started. Back Shows. Back Classes. Back Live Events. Back Tools.
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- 2. Open an investing account.
Back Dave Recommends. Back Store. Learn More. Answer a few questions, and we'll create a plan tailored just for you. On the other hand, if you plan to rely on your stock investments for income, you may want to focus on higher-paying investments only. This is even true if you decide that you're best suited to invest in index funds. This is the main question that will tell you if you should buy individual stocks, or if you'd be better off focusing on ETFs and mutual funds.
To be sure, there's nothing wrong with the latter option. Index funds can ensure that you do as well as the overall market, which as we saw in the introduction is quite good over time. If you want to pick individual stocks, we absolutely encourage you to do so. However, there's a caveat. You need to commit enough time to thoroughly and effectively evaluate stocks before you buy them. At a minimum, I'd suggest only investing in individual stocks if you have at least a couple of hours each week to learn about investing and to evaluate potential investment opportunities.
A brokerage account is similar to a bank account, with the key difference of being able to buy stocks, bonds, mutual funds, and ETFs. There are several great online-based brokerages with lots of features to help you analyze stocks, reasonable commission structures, and user-friendly trading platforms.
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When you open your brokerage account, you'll have to decide what type of account you want. Your broker likely has several options, but for first-time investors, there are generally two main ways to go -- standard or IRA. A standard brokerage account also referred to as a "taxable" account is your basic, everyday investment account.
An individual retirement account, or IRA, is designed for retirement savings and comes in two main varieties -- traditional or Roth. There's more to learn about IRA investing, but the first thing you should know about the differences between standard brokerage accounts and IRAs is that both have advantages and disadvantages.
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A standard brokerage account lets your deposit as much money as you want and withdraw your funds whenever you need to. The downside is that you'll have to pay taxes on the dividends and interest income you receive each year, as well as capital gains tax whenever you sell an investment for a profit. On the other hand, IRAs are tax-advantaged accounts. With both types of IRA, you won't have to worry about dividend, interest, and capital gains taxes each year. Plus, there's a maximum amount of money you're allowed to contribute to IRAs each year. Another retirement consideration is whether you have a k or similar retirement plan at work , especially if your employer matches a certain amount of your contributions.
Let's be perfectly clear about this -- however you choose to invest in the stock market, it's almost always a smart idea to take full advantage of your employer's matching contributions before you invest any money elsewhere. Each of the accounts has slightly different contribution rules, but in general they allow for higher annual contributions than traditional and Roth IRAs, so they may be worth a look if you have any income from self-employment.
It's important to do some quick comparison shopping when it comes to brokers, as there are some significant differences. Some offer tons of educational features, as well as access to high-value research reports. Some even offer branch offices throughout the U.
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And others are light on features but offer some of the cheapest commissions in the industry. Our sister website, The Ascent, has reviews and comparisons of several great brokers , so that's a smart place to start your search. Once you've decided which broker best fits your needs, opening a brokerage account is typically a quick and painless process. Here's the key point. If you have the time, knowledge, and desire necessary to invest in individual stocks the right way, we absolutely encourage you to do it.
If not, there's absolutely nothing wrong with building a portfolio of low-cost ETFs and mutual funds to take the stock-picking part out of the equation. In fact, Warren Buffett has said that the best way for the majority of investors to get exposure to the stock market is through low-cost passive index funds. With that in mind, if you decide that you're better suited to invest in stocks through funds, here are a few things you need to know.
A mutual fund is an investment vehicle that involves a bunch of investors pooling their money to invest for a common purpose.
You can invest in a mutual fund through your broker, but you invest a set dollar amount, and mutual fund transactions only take place once per day. Exchange-traded funds, or ETFs, are similar in some ways. Specifically, they are a pool of investors' money for a common goal.
However, they trade on major exchanges like stocks, so you would buy a certain number of shares, not a fixed dollar amount. And ETFs trade throughout the day, so if you place an order, it will be executed at the current market price. If you're planning to invest in funds, it's important to make the distinction between passively managed index funds and actively managed funds.
Index funds simply are designed to track an index and replicate its long-term returns. Because they don't require any stock-picking expertise, these funds don't have to employ active managers. This keeps costs much lower, as I'll get into shortly. On the other hand, actively managed funds hire investment managers to construct a portfolio. The big difference from an investor's perspective is that index funds are designed to match the performance of a benchmark index. Actively managed funds are designed to hopefully beat a benchmark index.
The downside is that active management costs more.
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To be clear, this doesn't mean that if you invest in an actively managed mutual fund that you will beat the market. In fact, numerous studies have shown that the majority of actively managed funds underperform the stock market. Some actively managed funds can be worth the cost, but be sure the fund has a well-established history of beating its benchmark index. As a final thought about funds, it's important to know how much you're paying. If you look at a quote of any mutual fund or ETF, you should see a number called the expense ratio , which tells you the fees you pay as a percentage of your investment each year.
There's no set rule as to what's too expensive.
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First off, this refers to the amount of your invested money. Obviously, things like your emergency fund shouldn't be in stocks. So, it's important to learn the basics of asset allocation. For beginners' purposes, we can narrow this down into two basic categories -- stocks equities and bonds fixed income. It's a smart idea for beginners to read through our guide to asset allocation , but for the time being there's one main idea you need to know. Stocks have higher long-term return potential , but also have more short-term volatility.