Some Common Investment Plans Articles | Personal Finance

Half a century ago, the average worker did not need to worry about saving money for his retirement. If he stayed with the same company for two or three decades, he was usually guaranteed a pension and a monthly social security check from the United States government. You also had to consider other things such as the medical benefits available under Medicare.

These workers still tried by saving about 10% of whatever they earned for a rainy day and this left a lot of them with some good money with which they could retire.

Most workers nowadays aren’t given the same retirement benefits and yet they still fail to place at least 5% of what they earn into a 401k retirement plan, talk less of saving any funds in addition to that. Today’s worker regardless of how much or how little he makes, must become a smart investor in order to guarantee that they benefit from a comfortable future.

Regardless of whether you keep $50 or $500 aside each month, it is essential that you learn a few investment basics in order to make the most of your money. These are a few of the most common investment opportunities which will be available to any category of investor.

Stocks:

Stocks, or equities, are a way to invest a small portion of ownership in a specific company. The number of shares that you buy, in proportion to the number available, determines how much of the company you actually own. Known as the best opportunity for long-range growth, stocks can be a risky short-term investment.

There are three types of stocks available for purchase:

-Large-cap stocks, from well-established companies

-Small-Cap stocks, represent lesser-known companies with fast-growth potential

-Mid-Cap stocks, lie between the large-cap and small-cap risk range

Bonds:

Basically an IOU from a company or government, bonds are a relatively safe investment. Bonds are issued as a way for corporations and government agencies to raise money quickly. Bonds come with a guarantee that the purchaser will get back their original investment, with a set amount of interest at a specific date. These fixed-income investments come in several categories, or grades:

-AAA, AA or A offers relatively low risk

-BBB, are medium grade

-Bonds lower than BBB have higher risk of default

-Junk Bonds, offer the highest risk, and are often worth nothing by their maturation date

Cash Equivalents:

This is a kind of investment which is short term and can easily be converted to cash. One example is Treasury otherwise known as T-Bills. Money market accounts are also a part of this category and although they are all quite safe forms of investment, returns on them are rather low.

Mutual Funds:

This is another popular form of investment and it is a very simple way of expanding your investment portfolio. Investors pool their money into a collection of stocks, bonds, and cash equivalents; this allows them to make the most profits at the lowest risk.

Investing money isn’t as difficult as it seems and with some little research, you’ll be well on your way to attaining the desired goals.