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Do you know a lot about investing your money? If so, you are in good shape. But what if you are like most people and don’t know much? In this case you have two options. You can hire somebody who knows more than you to handle your investments, or you can learn on your own. Which one sounds better to you?

The knowledge you have of investing is very important. Those who don’t know much should be careful about where they put their money. After all, you don’t want to take too much of a risk. If you do there is a chance that you could lose a lot of your hard earned money. Is that a risk you want to take? You work hard for your money so you should take your investments seriously.

To learn more about investing you can turn to one of the many books on this subject. Of course, you don’t want to overlook the knowledge that is available online. One tip to keep in mind: only gather knowledge from reputable sources. In other words, learning from Warren Buffet is much different than picking the brain of your next door neighbor who works at the local grocery store.

Before you begin to invest your money you should take note of how much knowledge you have. If you know a lot, move forward. If you don’t, either hire a professional or take the time to learn before you make your next investment.

According to a recent report on the legendary investor, Warren Buffet, it’s time to purchase stock in American companies. The method behind what might seem like a bout of madness for the aging investor is that when the total market value of US stocks drops to a level between 70%-80% of American Gross National Product, it’s time to buy. 

Buffet’s fantastic success as an investor is based, in part, on his practice of seeking out undervalued companies to invest in. He soon moved from turning over a profit through stocks in a company to purchasing undervalued companies and bringing the most-successful ones together into the Berkshire-Hathaway brand. But purchasing a struggling company is well out of the average investor’s financial reach. The only remaining option is to purchase a portion of that company as stock. 

It could well be said that nearly every company in the US that has the resources to continue operations is currently undervalued. With the total value of the stock market reaching the 76% mark at best, perhaps Buffet is right and its time to pull some money from under that mattress and invest it. 

Perhaps it comes down to a matter of faith. Once you decide whether or not you believe the economy will recover, the question of investing gains simplicity. If you cannot afford to lose a dime, then just like always, you should keep your money in a safe place and not worry about the stock market. However, if you have some cash on hand and want to research the possibility of creating genuine long-term wealth, it’s a great time to check out the stock market.  photo credit: ArtemFinland

When should you start investing for retirement? This is an important question and one that is asked by people both young and old. As a general rule of thumb you should begin to invest as soon as possible. In other words, it is better to begin to build your portfolio at 25 than 35. The earlier your start the better chance you have of building a nice nest egg that is sure to hold you over in retirement.

There are many reasons why starting early is the way to go. First off, compound interest is a phrase you should become familiar with. Generally speaking, the longer your money has to grow the more you are going to earn. Year after year your money compounds and soon enough you will begin to realize big gains.

Also, the earlier you start to invest the better chance you have of riding out bad times in the market. For instance, if you are 55 and just began to invest today, with the stock market sinking, you will find it difficult to get a good return before you retire.

The best time to start investing for retirement is as soon as possible. Don’t forget this tip!

In today’s day and age a lot of people are scared of investing money in the stock market. The market is anything but stable at this time, and this is forcing many people into other investments. While you don’t want to take all of your money out of the stock market you do need to consider which investments are safer. This is particularly true if you are nearing retirement age and will need to access your money in the near future.

There are several safe investments that you can consider. First and foremost, if you want to keep your money safe, while still receiving a decent return, you should consider opening an online savings account. Many online banks offer rates as high as 3.75 percent, and as the economy improves this number will probably increase. Why an online bank? If you compare the rates at online banks to a local institution you will see just how much better off you and your money will be online.

CD’s are also great safe investment vehicles. Generally speaking, with a CD you are locking your money up for a predetermined amount of time at a predetermined interest rate. For instance, you can purchase a CD for six months with an interest rate of four percent. If you know that you will not need your money until the CD matures this is a great way to earn a decent return without taking a huge risk.

You don’t have to keep all of your money in “safe investments.” But you should definitely keep some of it in places where you are guaranteed a return. After all, it is better to make money than to lose it, right?

Volatile times make money and investment decisions that bit trickier. Sometimes it’s easy to over-react and suddenly take all your money out of investments to put it in a “safe place” - but that can often leave you worse off than when you started. CNN Money has some tips on what to do with your money to keep it safe during the coming months and years:

• Don’t stop contributing to your retirement account. In fact, it makes good sense to contribute to your retirement account when the share market is down because then you’re paying less for your investment.
• If you have some capital losses, you may want to realize them now to cut your tax bill - consult your financial planner or tax accountant to see if you’ll come out better off.
• Switch from a traditional IRA to a Roth IRA this year - because when you switch you pay taxes on these assets, so if they are lower than normal, it’s a great time to change and pay less tax. There are various reasons that a Roth IRA could be better for you but there are also income limits so check it out with an expert before you make a decision.

With numerous fees to be found on a detailed statement from any mutual fund, it’s hard to be sure you’re not paying too much in fees.

When you are trying to make a decision on which mutual fund to choose, the easiest way to think about fees and charges is to look at the fund’s expense ratio. It is usually easy to find and easy to understand because it simply combines all the possible fees together and presents a percentage of your investment that will be used for fees.

But if you want to know what some of the actual fees are, a recent Financial Planning summary helps us out:

• Management fees are basically what the fund uses to pay its management and employees, and they’re usually less than one per cent per year.
• Administrative fees cover other costs of the fund, including mailing, record keeping and communications, and they are on average less than half a per cent per year.
• Sales charges or loads are a percentage applied to the purchase in a fund - although some now offer ‘no-load funds’. Pay attention to these because some funds charge up to five per cent per year.
• Marketing and distribution fees also exist for some funds, but not all.

With financial woes circling the world, there are bound to be bargain hunters looking to pick up a stack of shares at low prices, but how can you be sure when you’re actually getting a bargain? Some tips from Carolyn Bigda can help you avoid getting burned:

1. Check the forward P/E of a stock - compare this to similar companies or the industry benchmark, and you want a ratio that is lower than average (but not super low)
2. Check the trailing P/E for the same kind of ratio as the forward P/E - so that you can be more certain that the company was operating similarly before any stockmarket crash
3. Check the price-to-cash ratio and compare it with similar companies again, and again look for a ratio that’s just a bit lower than average
4. Check the company’s balance sheet and figure out the stability by dividing the total assets by total equity - if the ratio is 2 or lower then you’re on a good thing
5. Check the news - because of course, all of the good ratios in the world mean nothing if there’s some scandal or huge lawsuit hitting the company whose stock you want to buy.

photo credit: James & Vilija

Most stock market investors in the United States are not really happy these days. But CNN Money has come up with a long list of 21 actions to take to make lemonade out of the lemons they’re getting from the stock market at the moment. Some of the highlights include these tips:

• Spend time you’d normally spend trading learning about how to trade better instead - read some great investing books and do some research online
• Get some tax write-offs by selling off some of your losses - but check the tax implications precisely
• Sell off your energy stocks while they’re at a high, and before they start to fall
• Ensure that your investing expenses are as low as possible - if you’re moving money around, make sure it’s to funds with the lowest possible fees, for example
• Swap some of your shares into more conservative stocks - they call it “tweaking your portfolio”
• Be extra aware of the danger of scams - scammers love to take advantage of people’s anxieties in economic conditions like those we’re experiencing now; the same goes for unscrupulous salesmen
• Move money out of government bond investment, because high demand has pushed down yields on these
• Make an effort to save more, knowing that it’s a short-term necessity

photo credit: j / f / photos

If you are interested in investing in some stocks outside the United States, then there is an easy way for Americans to do so, using the ADR system. ADR - American Depositary Receipts - are a way of investing in a company abroad without having to actually send money out of the country, as such.

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photo credit: swanksalot

Some finance people are calling the current state of the US economy a time of stagflation: but what is it, and how can we best deal with our finances during this kind of period? Some recent CNN Money tips might help you to deal with economic difficulties and your investments in these times. Being informed and staying prepared is, of course, always half the battle.

1. Understand stagflation: The economy is slowing down, but there is also high inflation - that’s what the experts call stagflation. It’s particularly nasty because unemployment problems could arise yet prices are increasing, so lots of people find themselves in trouble.
2. Stay in the stock market: Don’t be tempted to pull out your share investments during this time, even if their value is falling. You’re usually better off holding on to them and waiting for the market to rise again.
3. Invest in TIPS: Treasury Investment Protected Securities rise according to the rate of inflation so these can be a secure investment in times of stagflation.
4. Be careful with investments in general: There are not so many good ways to invest your hard-earned cash during these times, so make sure you research investment oppportunities carefully before making a decision.