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by Marcie Kagawa, staff writer

You have some money to play around with and don’t want to see it gaining only minimal interest in a savings account. You could invest it instead.
Most people are afraid to invest during a volatile economy, but the truth is, if you can do it now, you should; there may not be a best time to invest, but now sure is a better time. Michael Cobb, a certified financial planner with the local Prudential Financial office, said: “Buying now means you can buy low and sell high. But too many people do the opposite because they are scared.” And it’s just that mentality that loses many investors opportunities and money.
If you think you are ready to start investing, there are five big factors you must consider.
First, you must determine your investment goals. Why are you investing and what do you hope to get out of it? Answering these questions will help you determine where you stand on the next factor, time. How much time you are willing to let your investments sit before turning them into liquid assets. Do you plan to need the money in a year or can you let it sit for five years, or more?
After this, you need to determine your risk tolerance. Could you handle losing 25 percent, 50 percent, or even 100 percent of your investment over a given period of time? How much can you comfortably risk?
Then decide how much money are you able to invest. Can you spare only a $500 lump sum or $50 a month indefinitely? Either way, over time, will make you money.
Finally, you must consider what kind of role taxes will play in your investment. Do you go with a taxable investment where you must pay taxes on the return every year, or a tax-deferred investment where you only pay taxes after you withdraw your money?
These five factors will help you decide what kinds of investments to make.
Because there are so many different investments to choose from, starting can be a bit confusing. When most people think about investments, the first thing that probably comes to mind is stocks, also called equities. And while stocks are a big part of investing, they are not the only thing to consider.
Two smart investment strategies you can use to help you choose your investments and manage risk are asset allocation and diversification. Marivic Dar, a financial planner and manager of financial services at Prudential, said, “You need to think about different buckets of money because you shouldn’t put all of your money in one bucket.” Taking asset allocation and diversification into consideration will help you determine how to spread your investments between different asset classes in order to take advantage of their fluctuating cycles, and it will spread your total risk out over a number of investments instead of just one.
One diversified investment you may consider is the mutual fund. This is an investment that pools money from different investors to invest in a portfolio generally created by a professional manager according to a specified risk profile and investment goals.
The portfolio itself includes investments from different asset classes, such as corporate stocks, small company stocks, foreign investments, and bonds.
Mutual funds are relatively simple to get into and offer many conveniences. Many can be started with small amounts of money, your gains can be automatically reinvested, and regular statements are provided to help you keep track of your investments.
Another investment to consider is bonds. A bond is a loan to a government or a corporation that you earn interest on. You will receive interest-only payments periodically and receive the original amount of the bond before a specified date. Bonds can mature for up to 30 years, so it is important to choose a bond that fits your time horizon.
A common type of bond many people invest in is the savings bond.
If you want to create your own portfolio, it is easy enough to start buying and trading stocks using an online service such as E*TRADE, TD AMERITRADE, or Fidelity. All you need to do is open an account depending on what kinds of investments you plan to make—you can trade domestically and/or internationally—and you can start investing. Be sure to read the fine print before opening an account, so you you will be aware of any rules you need to abide by and fees you may need to pay.
If you think you will need some guidance in the world of investing, you can always turn to a financial planner or wealth manager. The important thing to remember in investing is that the more you know, the more you will benefit from investing.



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