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Investing can be an intimidating topic for newcomers to the realm of investing. There is much to consider – from account choices available, to risk profiles you should take when investing, to understanding how best to protect your capital.

Most investors begin investing because they wish to see their funds grow over time or need help meeting financial goals by a certain target date.

How to Start Investing

Searching the internet for terms like “stock” or “bond” can quickly turn into an alphabet soup of financial jargon and investment terms. A great starting point may be a book which systematically introduces investing concepts step-by-step.

How2invest can be one of the most effective strategies for reaching financial goals, if approached early enough. But many don’t know where or how to start investing.

Tonya Rapley of My Fab Finance and contributor to Forbes, Refinery29 and Vogue has the answer to your quandary as a millennial juggling rent payments, bills and debt payments: she offers straightforward money management techniques in her book which outline ways to create budgets, set financial goals and improve credit as well as tips for starting investments such as opening accounts, setting savings habits and calculating risk tolerance.

Getting Started with Investing

There are various methods of investing your money; some involve active trading while others are more hands-off. As a beginner, it may be best to start small with savings accounts such as certificates of deposit, high yield savings accounts or money market accounts; conversely a financial advisor can assist in setting goals, investing the funds and managing the portfolio.

Investing is a vital component of meeting your financial goals, whether they include building an emergency fund or covering expenses. By investing, your money can work for you, potentially producing income and growing in value over time due to compound interest. The earlier you start investing, the better it will work in your favor; make a plan and determine your timeline (known as “investment horizon”) before beginning.

Investing in Stocks

Stocks offer investors of all experience levels an effective means of growing wealth over time. Stocks have long been recognized for their potential to produce high returns, yet can be highly volatile at times.

Before investing, it’s essential to assess your own financial situation and goals, including budgeting, debt levels and how much can be dedicated towards investing. Individual stocks or mutual funds may be appropriate investments; alternatively you could utilize robo-advisor services at a low fee to select and manage portfolios for you.

Individual stocks are an ideal way to explore investing, but taking time and doing your research are essential in making smart selections. When investing this way, diversifying your portfolio to reduce price volatility risks. Review progress over time and modify strategy if necessary.

Investing in Bonds

Bonds are an attractive form of fixed-income investment that offer investors regular returns while simultaneously helping diversify their portfolio by diversifying with less risky assets than stocks.

If you’re considering investing in bonds, it is essential that you carefully consider your financial goals and tax implications before buying individual bonds through most brokerage accounts. Although buying individual bonds might seem simpler than doing research for each one individually, doing this research takes considerable time and research so as to find ones which meet your objectives.

Another key factor in choosing bonds is creditworthiness of issuers. A rating system (similar to how banks assess those borrowing money for mortgage loans) helps identify which bonds are considered safest by assigning them a grade, with AAA being considered the highest level. Junk bonds (sometimes known as high yield or junk bonds) offer higher interest rates but may have greater risk of default; on the other hand, Treasury (T-bonds) bonds backed by full faith and credit of U.S. government are considered safer options.

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