How To Invest Wisely And Make Your Money Grow
Wise investments of your spare funds can be a great way to grow rich. These days,
savings accounts offer very low interest and it is a waste to allow your money to lie in
them. Based on your appetite for risk and your financial needs, you have various other
investment schemes and options to choose from.
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It is always safer to have a diversified portfolio, that is, to spread you money around in
various types of schemes, so that the risks and returns get balanced out. The company
you work for would have a 401(k) plan which is always a safe bet. In this scheme, they
will deduct a part of your salary every month and give it to an independent financial
source to manage the investment, so that you get a healthy return at the end of your
tenure. For those of you with greater risk-taking ability, stock markets or mutual funds
can be a good idea. In stock markets, you can buy shares of companies listed on the
stock exchange. Usually, good companies offer dividends along with a fair return on
your investment. Dividends are not mandatory, but a lot of companies like to distribute
their profits among shareholders as dividends.
Some companies prefer to reinvest the profits into expansion projects instead of
declaring dividends. These re investments in turn should lead to further profits.
However, the stock markets are unpredictable and a lot of people who dabble in stocks
with the purpose of making some quick bucks may end up with losses instead.
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Mutual funds are relatively safer investments, though they are also subject to market
risk. Mutual funds are investments made in the stock market by financial managers with
a fund collected from actual investors. There can be sector-specific mutual funds for
instance those that invest in Pharmaceutical or IT or infrastructure companies only.
Whatever be the mode of your investment in the markets, it is vital that you track these
on a regular basis. If the prices of your shares or mutual funds decline at a time when
there is a slowdown in the economy as a whole, there is no need to panic and sell at a
loss. The markets will quite likely bounce back to where they were or perhaps even
better. However, if the markets are strong and yet, the value of your mutual funds is on a
decline, it could mean it is not well invested and it would be advisable for you to sell
and move your money into something that will generate better returns. A financial
consultant can advise you about the market situation and what types of investments will
suit your needs best.
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