Friday, February 27, 2009

Is the Stock Market where I should Invest?

By Samantha Asher

Do you have some extra cash lying around doing nothing? Do you want to make more money than you are making at your job? Even if you don't have cash at the moment, you can save some up and start investing. Start investing and you can start making more money.

There are many different ways to invest money. Which should you choose? You can invest in stocks, bonds, mutual funds, commodities, derivatives, real estate, currency, money market funds, or you could lend it to your unstable cousin. Most of these will probably make you some money, but some will earn you more than others. Why should you choose to invest in the stock market over the other investments?

Stocks over bonds is almost always a guaranteed higher return. The historical return of the stock market is about 10 to 13%. That means that if you invest over the next 30 or so years in the stock market, on average you'll earn between 10 and 13%.

If you invest in bonds and CDs or certificates of deposit, you'll be lucky if you can get 6%. Bonds are usually more stable, unless you get into junk bonds. If you want to earn more money, you should invest in the stock market.

By diversifying your stocks you can minimize the extra risk they hold over bonds and CDs. Try investing in mutual funds. They will instantly diversify your money and minimize the loss you can get. With the right diversification, you can handle the risk of the stock market, especially if you have a lot of time to invest.

Why should you invest in just stocks and not derivatives? Because derivatives carry more risk and are much harder to understand. Sometimes you won't even really know where you money is coming from with derivatives unless you are some kind of math genius. If you had to choose between stocks and derivatives, choose stocks.

Unless you love math and derivatives, you'd probably do better to stay away. You probably haven't ever even heard of a future before. If you do decide to invest in them, you still are investing in the stock market.

If you really want to make a lot of money, invest in the stock market. You can make a lot of money with minimal risk if done right and without complication. You can even get started as soon as you want.

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