There are a lot of ways to invest your money, but not all of them are wise. If you have some extra to put aside, should you put it towards your retirement, sink some money into your friend's new business venture, or start investing in a mutual fund?
What is a mutual fund? Answer: "an investment program funded by shareholders that trades in diversified holdings and is professionally managed."
We have some tips for finding wise investments in this article, but first it's important to understand that the advice we offer here should not replace that of a professional. Before you decide that companies offering particular services are a definite growth industry based on what you read below, talk to a broker who can truly establish the potential of a specific company.
Before doing any investing at all, make a budget for yourself. Remember that investments should be made over the long term, and every little bit you can put away will help. $50-$100 put towards a mutual fund with a portfolio including a company who manufactures products may not seem like a lot, but it will add up. On the other hand, if you can't afford that $50, the wisest investment will be in your immediate needs. For wise real estate investments be sure to speak with experienced real estate agents and or brokers.
Once you have those immediate needs covered, start thinking about your future needs. The older you are, the more seriously you have to start thinking about putting low risk money aside for retirement. While RRSPs have taken a hit over the last half decade, they are still the most secure investment there is in your future.
Speaking of age, take a close look at what you can risk at this point in your life. The younger you are, the more time you have to recover if the company you bought stock in goes bankrupt. That means you can afford to invest in higher risk portfolios. As you get older, you are going to want to risk less.
Now it's time to do some serious analysis on potential companies you want to invest in. How can you tell if that company is worth the money? Let's say you are taking a look at a public company providing public services. Pick a location with a lot of businesses, and a lot of functions. A catering company with a sound business plan and marketing appeal should do well. However, keep competition in mind. If the market is saturated, this type of company may prove to be an unwise investment.
The recent crash showed that even wise investors may stand to lose money. Investing with caution, and following the rule of buy low sell high, may be the best way to ensure you make the wisest choices possible.