How to invest money, rule #1, is that there is no such thing as a perfect investment. A perfect investment would have the following features: guaranteed safe, guaranteed to make money and lots of it, high liquidity, zero costs and expenses, big tax breaks, and easy to monitor… so you always know where you stand financially. All investments can be compared based on investment basics, but no honest proposition contains all of the above features.

A scam will generally IMPLY that safety and high profits are guaranteed. Your first question before you invest money: what are the specific guarantees for safety and investment returns? If the answer you get sounds confusing or misleading, you have no need to ask any more questions. Something is rotten in Denmark, since no investment offers high safety and high profits… except scams. Now, let’s move on to some other investment basics and questions to ask. Remember, a large part of knowing how to invest money involves knowing how to avoid bad investments or those that don’t fit your needs.

Ask about LIQUIDITY. How quickly and easily can you get your money back if you want to cash in? What will it cost you? This is a very honest question, and the answer you get should be straightforward. You’re out to invest money to make money; not to get stuck with a loser that will cost an arm and a leg to liquidate.

The COST OF INVESTING is another investment basic you need to ask about. Most investments involve charges and fees to buy, hold, and/or sell. Many times the details are in the fine print, so make sure to ask upfront. High investment costs can turn a winner into a loser. For example, a good simple fixed annuity will pay a competitive interest rate and will have no charge to invest or hold; and no charges to cash in after just a few years. The wrong annuity contract can cost you 3% or more a year in charges and fees, plus heavy charges if you cash out in the first few years.

Be real careful when an investment promises tax breaks. Ask questions first and get it in writing before you invest money. Then, run it by your tax professional if you have one. If you don’t, take a pass. Your goal is to invest money and make money in the process. Not to take a chance and wind up in trouble at tax time.

Our last area of concern in regard to how to invest money and investment basics I refer to as VISIBILITY, or the ability to monitor your investment. After you invest money, then what? Can you track the value of your investment so you know where you stand financially at all times? Will you receive statements each quarter and at the end of each year showing the value of your investment assets?

As a financial planner, some of the worst horror stories of new clients I interviewed were brought to light when I asked to see their records for the investments they held. Sometimes their records or statements were incomplete or otherwise questionable. Sometimes, these investors could find no records at all and didn’t know who to contact to find out the status of their investment. That’s a perfect example of how to invest… NOT.

Before you invest money, sort out the investment basics covered in this article to avoid scams and other major investment mistakes. Don’t be afraid to ask the questions presented here. If you are dealing with honest people, they will be glad to answer your questions. If not, look someplace else.

That is not smart investing. Once you understand how to diversify correctly, you will have a critical advantage over other investors. Since the financial markets are as predictable as the weather, you need a strategy to help prevent you from losing money. I can’t predict exactly when it will rain, but I can give you an umbrella to help protect your investments. How am I going to do it?

I’m going to show you how to diversify effectively. The key to diversification is spreading out your money over different types of investments. Your investment portfolio has endless possibilities. There are many different ways to diversify, and some of them will work for you. There is no “one size fits all” strategy to diversification.

Here are ten different ways to protect your investments:

1. By investment type. Most investors are familiar with this method, which can include stocks, bonds, mutual funds, currency, convertible securities, and real estate. The values and earnings vary greatly for different types of investments. Make sure you choose the type of investment that is right for you.

2. By country. The global economy is becoming more connected, with more companies and countries working together to earn profits. Investing globally in different countries can prevent you from losing money if one country’s economy slow down.

When the United States goes into a recession, investments in foreign countries may perform better. Foreign currency is another way to diversify by country. Some foreign currencies hold their value better over the long-term, which can add security to your investments. This can also help you fight inflation.

3. By industry. Each industry has different market cycles and different profits. An energy company may earn different profits than a retail company or manufacturer, and investing in different industries can give you an average of their returns.

Index funds are a great way to invest in many different industries with low costs. Many investors follow the Dow Jones index, which is itself an average of major industries. Sector funds can also help you mix up the industries in your portfolio.

4. Market capitalization. This term refers to the size of a company. Smaller companies have different market cycles than larger companies, so they earn different profits.

Investing across different sized companies can minimize risk in a difficult market. Smaller companies also have fewer investors, so investors may find underpriced opportunities more often by investing in small companies.

5. Investment company. There are many investment companies available out there, and even more financial brokers. Every company is different. The company that manages your investment has a significant impact on your risks and returns. Make sure you feel comfortable investing your money there.

Mutual funds, stocks, and bonds are not guaranteed like a bank deposit, so it will be difficult to recover your investment if a company goes bankrupt. Investing with different companies can help protect against this.

6. Investment style. Equity funds usually focus on one of two investment strategies: growth or value. These strategies usually take turns outperforming each other, which can be a roller coaster ride if you focus on one investment style. By investing in both, you can get the average performance of both styles with moderate risk.

7. Market development. Financial markets like the stock exchanges in New York, London, and Tokyo have been around for over 60 years. Investments are generally less risky in developed countries with productive economies and stable governments. Emerging markets usually do not have a well-developed economic structure. Investments in these countries can have explosive growth.

8. Rate of return. It is impossible to predict which investments will perform best in the future, so chasing the hottest new funds will almost always lead to below average returns.

Keep an eye out for funds have fallen out of favor recently but still have great management, low expenses, and solid long-term performance. These “sleeper” funds may keep your returns climbing.

9. Holding period. Stock traders will hold different stocks for different periods of time. This is a strategy that investors can also take advantage of.

Set different target dates for some of your investments, and write it on your financial statement. Once your investment reaches the target date, it is time to consider selling it for a better opportunity. This can help you take advantage of market cycles, and you can always come back to a good investment later.

10. Cash. Sometimes investors forget that keeping your investments in cash is a viable option. Investors usually want to have as much invested as possible, but cash can sometimes be a good choice.

Avoid using the “all or nothing” approach to cash when the market becomes chaotic. Investors who panic and move 100% of their investments into cash usually do it at the wrong time and miss any market recovery.

You can keep your risk down and stay ready for great opportunities by following these three guidelines: move small portions of your investment when moving into or out of cash, keep track of your investments regularly, and don’t hesitate to invest in a great long-term fund when the market calms down.

Introduction

This article is just the basics for getting started in real estate investing. This is not a how to article but an article that gives you some information about things to do to get started. Everything in this article is tools that can be applied to helping anyone get started in real estate investing. I am going to give you my eight keys to getting started. Nothing is right or wrong but reflects the point of view of the author. Laws and legal practices vary from state to state, and laws can change over time. The author does not vouch for the legality of his opinions, nor is there any intent to supply legal advice. The author strongly encourages the reader to consult with professionals and an attorney prior to entering in any real estate transaction or contract. The author is not a writer but he is a real estate investor. There will be grammar mistakes and errors, so don’t be too critical of the grammar but focus your energy on what is being said. With that said prepare yourself to think a little differently and expand your mind. Let’s get started on an amazing adventure.

The Eight Tips are as follows

1. Desire
2. Goal Setting
3. Learning What To Do
4. Attending a Real Estate Investing Seminar
5. The Billings Montana Market
6. Finding a Mentor
7. Your Real Estate Team
8. Just Do IT

1. Desire

Before we get in to the bolts and nails of real estate investing in I want to talk to you about desire. If you are going to be successful at anything in life including real estate investing you have to have the desire to do it. Desire is defined as longing or craving, as for something that brings satisfaction or enjoyment. Desire stresses the strength of feeling and often implies strong intention or aim. In real estate investing if you don’t have a desire to learn and grow as a human being and really get satisfaction out of it, then real estate investing is going to be hard to do. When I go out and look at a property it brings me a lot of enjoyment. Every aspect brings me joy from talking to home owners, figuring out how I can make a deal work, to buying the house and to finding a good homeowner or tenant for the house. Real estate investing may not be for everyone but real estate investing can offer anyone the financial freedom we all crave for. If you do not have the desire for real estate investing that is ok, it can still help you to live your dreams and help you to get where you want to go in the future.

Why is real estate investing an amazing avenue for anyone to live out all of their dreams? Let me ask you a few questions. Do you have enough money to do anything you want? Do you have everything you want? No debt? A nice house? Great Marriage? The freedom to do anything regardless of how much it costs and the time it takes? If you have all of these things then you are one of the few people in America who does. Most people may be working fifty hours a week and making just enough to pay their bills. In today’s day and age most people are living pay check to pay check never really knowing if they will make enough to pay the bills that just keep piling up. If you cannot keep up with your monthly bills how are you going to plan for retirement or send your kids to college or have time to enjoy life. The answer to all of these questions is becoming financially free. Now it’s not going to be easy everyone will have to get off the couch and out of their comfort zone. Real estate is proven to be one of the fastest ways to get your out of the rat race of the nine to five and begin living the life you deserve to live. Everyone wants something different out of their life. Some dream of traveling the world, spending more time with family, volunteering, golfing, laying on a beach, giving back to the community, or anything that will make them happy. There are thousands of things that make people happy.

Making it in real estate takes a person who has a strong desire to change their lives for the better and think big. Anyone can become a great real estate investor. It is going to take a lot of work and can be a struggle at times but in the end it will be the most amazing feeling ever. The people that make it in real estate investing all have a few things in common. First they run their real estate investing business like any other business out there. Second they get out there and network with anyone and everyone. Some people might be like me and have a hard time talking to other people. If you are that is ok, anyone can learn how to become a people person, it just takes hard daily work. You have to push yourself past your comfort zone. The third thing is that you cannot be afraid to fail. Everyone has failed at something but the most successful people out their learn from their failures. The fourth thing is that you have to put a good team together. I will go into putting a team together in a later chapter. The concept of putting a team together is so that when you don’t know something you have team members that know what to do and can help you with questions. The can also make sure that you are not working yourself to death. You do not want to be the person doing everything in your business. Doing everything is a receipt for failure. You have to put together good people who you can trust and rely on. The fifth thing is that you need a mentor. Sixth and final is the desire to do it. No one can become successful at something if they don’t want to do it and don’t get satisfaction out of what they are doing.

2. Setting Goals

Having goals is one of the most important aspects of achieving what you want in life. You don’t want to just have your goals up in your head you want to write them down and past what you have wrote on the wall somewhere or in the bathroom mirror. You want to review your goals daily and read them out loud to yourself. This way you remind yourself everyday why you are building your business.

How should you start to write down you goals? First off you should think big, and by big I mean HUGE. If your goals are too small you will easily achieve them and have nothing else to look forward too. You should start off by asking yourself the question if I had all the money and time in the world what would I do, what would I buy, how would I spend my time, and how would I spend my energy. Are you starting to write these down? Well you should be. Think about what you want, spending time with family, traveling the world, the best cars, a castle, owning a small country, running for president, having the biggest real estate investing business in your area or in the country. Whatever your dreams and what you want out of your life, write it down. Some of my goals are becoming free, traveling the world, having a Ferrari, having 10 vacation homes all over the world. Right now I am just trying to get you out of your comfort zone of thinking and let your imagination run.

There are several ways to set goals. I have learned a lot of ways you can set you goals and there is no right or wrong way. The best ways that I have found to set your goals is to break them up into two categories. First your short term goals. This should be goals from a month out to around a year. The second is your long term goals these goals are you think big goals and what you see for your future.

For year one I like to first make a list of what I want to achieve this year and I will give you an example of how to do that. For year one you want to be very specific first you want to list what you want your income to be at the end of the year, next how much cash in the bank you want (this is money in your checking account, not assets). Next you want to list how much you are going to give. Giving is a very important, this can be giving to charity, giving of gifts to friends and family, giving to your school or anything you can dream of. As long as what you give brings joy to others who need it more than you. Next list what bad habits you have that you want to eliminate. Weather is be quitting smoking, spending too much on junk, drinking too much, working too much, not spending enough time with family, too much TV, not exercising and many more. We all have bad habits that need to be changed in order for use to grow as human beings. Under each of these bad habits list out some steps that you can take in order to quit them. If you bad habit is being lazy and not exercising enough what can you do to change that. Well you can get a gym membership or a home work out program. Commit yourself you following through with a plan to work out 3-5 days a week. For you to change these bad habits you have to be totally committed and follow through with a detailed plan you set for yourself. After you have your plans in place you should start listing several things you want to achieve or do in the next year. This can be start a successful business, spend time with family, travel to 2-5 places and so on. Now under each of these you should also write a detailed plan on what you need and what you need to do in order to achieve these goals. Finally you should take all of this information you have a write on page on what you see your life being over the next year. Doing this is a great exercise to really see what you want out of life.

Goals Year One

This is what I am going To Do This Year
Income: $500,000
Cash: $100,000
Give: $20,000

Bad Habits that will be changes:

Over Sleeping 1. Go to bed at 11 p.m. 2. Use a timer and set it for 8 hours 3. Set the timer on the other side of the room

Buying things that you don’t need: 1. Going out shopping less 2. If you have the urge to buy something think to yourself is thing item going to help me to achieve my goals of becoming financially free? 3. Tell friends what you are doing, so they can help to stop you.

What I want to Achieve:

Start a successful Real Estate Investing Business: (you should write a detailed step by step plan of everything you need in order to achieve your goal)

Travel: Where do I want to visit? 1. Gators football game (what I need to do it, money, etc)

And last your own page about what you want to achieve using words like I will and only positive words.

For long term goals you don’t need to be as specific right now, but you should list them and under them list a few steps or smaller goals that need to be achieved before you are able to achieve them. With the long term goals always think big. Another good exercise for long term goals is to make a collage of you goals. Put pictures of the house you want on it, places you want to travel, a picture of your family, a number of what income you want in or anything you can think of.

3. Learn

Knowledge builds confidence and destroys fear. If you are starting any kind of business you need to learn the ins and outs of that business. The best way I have found to learn about real estate investing is to read all about it. But once you know it you have to apply what you have learned. Learning and reading is just one step to take. There are thousands of books on the market about real estate investing and everyone has something you can learn from. You don’t just want to read real estate investing books though. You also want to fill yourself with motivational and leadership books. Every successful person that I know if a reader and they all spend at least thirty minutes a day reading something that will teach them about improving their business or helping themselves to become a better person. Some of the best books that I would recommend reading are listed below.

1. Rich Dad Poor Dad by Robert Kiyosaki (read this first and also ready everything in the rick dad poor dad series, great books to start with and will expand you mind)
2. Be a Real Estate Millionaire by Dean Graziosi
3. Flip your way to financial freedom by Preston Ely (this is an E-Book)
4. Four hour work week by Timothy Ferriss
5. The Attractor Factor
6. Short Sale Pre-foreclosure Investing by Dwan Bent-twyford and Sharon Sestrepo
7. Keys to success, by Napoleon Hill
8. Think and Grow Rich by Napoleon Hill
9. How to win friends and influence people
10. Any Book by John C. Maxwell (he has tons of amazing leadership books)
11. Getting Started in Real Estate Day Trading by Larry Goins
12. The E Myth by Michael Gerber
13. How to be a quick turn real estate millionaire by Ron Legrand
14. The Power of Full Engagement
15. The It Factor
16. Anything by Anthony Robins

There are tons more you can read but these will give you a great start. You should also read books on negotiating, sales, motivation, and biographies on American business people.

I hope this list gives you the knowledge it has given me. If you learn and apply what you have learned from these books there is no reason that you should not become very successful.

4. Attend a Real Estate Investing Seminar

Attending a Real Estate Investing Seminar can be one of the best places to learn about real estate investing from some very well known experts. There are several seminars going on all over the country every weekend. If you live in a big city it will be very easy to find one. If you live in a town like Billings Montana you might need to travel a little ways to find one. Now most of the best meeting cost money to attend them. Some range from five hundred dollars for three days and some can be up to $20,000. There are a few that I would recommend. Than Merrill is a great speaker to go hear. I have learned a ton from him. You can find his company online by Google searching him. Also rich dad poor dad has seminars all over the country. I attended one of their seminars in Billings Montana for only $500 dollars and learned a ton from it. There is also Preston Ely, Larry Goins, and hundreds of speakers out there. If you find a great book that you really enjoyed, then just simple search for that person online and see if they are speaking somewhere or offer a seminar close to you.

Another reason I recommend going to a seminar is because they get you pumped up and motivated. I have not yet found anything else that just gets you feeling like you can do anything. When you get back from one of these seminars you will have tons of energy and knowledge. Every time I get back from one all I want to do is going out and do a deal or ten.

These seminars will also provide you with several opportunities to purchase amazing real estate investing tools, software or learning material at a fraction of the cost. Believe me when I tell you all of the low priced seminars try to sell you something. But a lot of times what they are trying to sell is some really good stuff.

Another reason to attend a seminar is to network with other investors and build relationships with them. You can meet other investors who you can partner with on a deal, sell a deal too, people who will provide you with deals and so on. You should have hundreds of business cards made up and try to give them all out. You never know how much one business card you hand out can make you.

5. Learn About the real estate market in your area

Most real estate investors start their career off my investing around where they live. This is why I do my real estate investing in Billings Montana. You can venture out when you have more experience. The reason behind this is because we feel more comfortable with the areas and know the areas better. It is also easier to get local real estate information that we need. Investing in your local market is also cheaper to start out, there is less travel costs, you can see what you are buying and it may give you a feeling a comfort.

First you have to decide which part of town is the best place to invest in. This can be determined by what kind of real estate investing you choose to do. I have not gone over the types of real estate investing but some include rehabbing (fixing up and selling), wholesaling (finding deals and selling them to other investors), buying to rent, and there are a few others. These are the real estate strategies that I use for the most part. When looking at the market you need to see where other investors are buying their houses. Most of the best deals will be found in low to middle class neighbors hoods. By low I don’t mean drug infested war zones, what I mean is blue collar safe neighbor hoods that might have somewhat older houses and houses that are not on the higher end price side. Now you can find deals in the higher priced neighbor hoods but most will be in the low to middle income neighborhoods. When looking where others are buying ask local realtors, other investors or appraisers.

When talking with investors ask them several questions such as what neighborhoods they prefer, what type of houses they buy (3 bed 2 bath), and what they do (rehab, rent, wholesale). You should not look at other investors as competition but try and work with them.

There are different types of markets such as appreciating markets, flat markets, and deprecating markets. Appreciating markets are markets that there is no enough houses or a very high demand for houses which causes the price of houses to go up. The reason there is a high demand for housing can be because of job growth, a very appealing area, or several reason. Flat markets are markets that have no or very little growth. This means that there is not a lot of demand; buy just enough to fill every ones needs. Depreciating markets are where there is a lot more houses than people to fill those house. This causes house prices to start going down. This can be because of a large employer leaving the area, a natural disaster or just over building. There is an old saying buy in a bust and sell in a boom. In depreciating markets you can pick up several deals, while in appreciating the house prices are going to be much higher and harder to find great deals. The deal will still be out there you just have to know where to find them.

Learning your market is another key to becoming successful. Real estate Brokers and experts in your area can be the best source of information for you. Learn to use them to find out what kind of market you are in. If you are in Billings Montana we are in a pretty stable market. Billings Montana has not seen the ups and downs that other markets have experienced. I will have to say that I have been noticing a little bit of a downward trend but not much. Once the first time home buyer credit is over with we might see a little more decline. Every market can vary by neighborhood, so make sure you know you market well. I have seen the same houses just one mile apart selling for totally different prices.

6. Find a Mentor

Having a mentor to help you can be your biggest learning experience. Mentors can help you with any questions you may have, walk you step by step through the investing process, give you moral support, you learn from their proven system, and also network you with others in the business. Every successful real estate investor that I know says they owe a lot of their success to the mentors they have and had in their lives. I have had one of the best mentors around, my father. He is teaching me something new every day and pushing me to become successful.

When trying to find a mentor I would suggest network with the investors at your local real estate investors club meeting. There is a real estate investing club in Billings Montana that meets once a month. You can find information about real estate investing clubs in your area by searching for REA or real estate investors club then your area in Google. When you go to the meetings ask around who the biggest investors are. Then ask if you could get together with them sometime and discuss real estate investing. Ask them if they would consider working with you to get their career going. Offer your services as a bird dog. Bird dogs are people who go out find deals or leads about deals and give them to other investors. A bird dog gets from $500 to $3000 dollars depending on the deal. Make sure that you have a bird dog contract signed with the investors saying that if you find them and deal and they buy it that you get paid a certain amount of money. Being a bird dog helps you to build credibility with the investor and they are more likely to mentor you if you have something to offer them. If you would like to contact me with a question go to my web site Big Sky Property Solutions LLC.

7. Your Real Estate Team

Building an effective team can make your life as a real estate investor a lot easier. You are only one person and cannot do everything or be an expert in every aspect of real estate investing. Going at a project alone can become one of the most frustrating experiences you will ever encounter. Many people have become frustrated and quite real estate investing because they try and juggle too many things. Make sure that when putting a team together you provide everyone with win-win opportunities. When someone knows that working with you is going to make them money they will put you as a higher priority on their list. But you have to prove it to them that you are the real deal.
People to have on your real estate investing team include

o Real Estate Agents ( find the top agent for volume of sales in your area and other agents who work with real estate investors)
o Real Estate appraisers (find an appraiser that has done a few hundred jobs or more and make sure they carry errors and omissions insurance)
o Real estate contractors (good rehab crews that can get the job done in a timely manner, have 3-5 crews and on every deal get 3 estimates done. Ask for referrals from them and make sure they are licensed)
o Real estate attorneys (every investor needs an attorney, they can help to protect your assets, make sure you find one that works with investors)
o A property management company (can manage your properties and will give you leads on property they are managing that might come up for sale)
o Title companies (take care of the legal process and make sure there are no liens against the property you are buying, choose one that does hundreds of closings a year)
o Home inspectors(charge about $400 but will give you a great inspection and could save you thousands in the long run)
o And your Mentor

All of these people can help you in various aspects of real estate investing. You might find that there are a couple others that are keys to your business but this is just a list of a few.

8. Just Do it

There is no better phrase out there then JUST DO IT! Once you have learned all you can networked with investors in Billings and learned real estate investing strategies there is nothing left to do but get your feet wet. There is no better learning tool out there then doing a deal. Once you have completed that first deal you will know what to expect and find out that it is not as hard as you thought it would be. You will have learned what you did right and what was frustrating. Take that experience and ask yourself what would have made it run smoother. Apply that to your next deal. Then the next deal will be easier and it keeps getting easier as you go. I will say that every deal is different from the last but that what makes this business fun. You have to be creative and always keep on learning and growing with your business.

The average person never uses what they learn. Don’t be average apply your knowledge. When going out and doing your first deal act like you have done 1000′s of deals. The fastest way to change a habit is to act like it is true.

Five keys for success
1. Specialized Knowledge
2. Tools of a professional
3. Have the mindset of a winner
4. Mentors
5. Money and the knowledge of leveraging it (you don’t have to have millions to invest in real estate, there are many strategies out there to use other people’s money, or no money at all)

INVESTMENT BASICS

You can not put together a complete investment strategy without an understanding of the investments that are included in the package. Nor can you build your own house without knowledge of the pieces, parts, and tools required. Concentrate on investment basics before you decide on what plan to go with, or you may not be able to finish the job successfully. This means that you need to understand the investment characteristics of stocks and bonds, and how they compare to each other and to other investment alternatives.

Only then can you learn how to invest and put together a complete investment strategy. Like I said, it’s fun to invest when you’re making money; but you’ve got to start with the investment basics. Most people don’t know stocks from bonds. Start by reading articles or other publications that get down to the basics. For example: what are stocks, what are their risks and potential rewards, and how do they compare to bonds and other investment alternatives.

Now you are ready to learn about mutual funds, which are the investment of choice for most average investors. For most people they are the easiest and best way to invest in stocks and bonds, plus other asset classes. Mutual funds are simply investment packages that are professionally managed for you. To pick the right funds you’ll need to understand the asset class they invest in: stocks, bonds, money market or specialty (other).

HOW TO INVEST

Now you’re ready to learn how to invest and put the pieces together with a sound investment strategy. ASSET ALLOCATION is a crucial part of your investing and financial education, because how you allocate your money to the various asset classes will determine your success or failure… more than anything else. Simply put, how much should you invest in stocks vs. bonds vs. other investments? This is also called your asset mix. It’s much more important than what specific investments or funds you pick.

Once you’ve put a balanced portfolio of investments together you’ve got a great foundation. But if you want to continue to build and prosper you’ll need an ongoing investment strategy to make additions and changes over time as necessary. Read articles on investment strategy, asset allocation, and how to invest. It will all come together for you if you start at the beginning and build a step at a time.

Learn to invest like your financial future depends on it. With Uncle Sam in debt up to his eyeballs and employers fighting to survive, it does.

Your best investment is a good, complete investment guide. I’ve been tuned in to the world of investing for 35 years and have read over 100 books on investments and investing. Most of them center on the stock market or some form of investment technique or get-rich-quick scheme. Many are time sensitive and out of date by the time you read them. Many tell you how to invest money like the author did when he made his millions.

What you seldom get with an investment guide or book is an understanding of investment basics and a simplified blueprint of your many investment options. So, here’s your simplest and free best investment guide to all of the investments in the world. There are only 4 different investments or asset classes out there depending on how you categorize things. Once you bring it down to this level you have a basic framework to work with.

CASH EQUIVALENTS and other safe investments pay interest. Either your principal or rate of interest is fixed for a period of time. Examples include U.S. Treasury bills, money market mutual funds and bank savings accounts. Advantages include high liquidity (access to your money) and safety, low risk.

BONDS are long-term debt instruments and they pay more interest income than the above. Examples include U.S. Treasury bonds, corporate bonds and bond funds of various types. Advantages include relatively high interest income with a moderate level of risk.

EQUITIES or STOCKS represent ownership in a corporation. Examples include blue chip stocks, growth stocks and equity funds. Advantages include ample liquidity, growth and some income in the form of dividends. Risk is significant and profit potential is high.

ALTERNATIVE INVESTMENTS is our final category. Examples include real estate, gold, and foreign investments. Advantages include high profit potential and an alternative to stocks when they are out of favor. Risk can be significant here as well.

That’s about as simple as an investment guide can get. All investment options can be fit into one of these asset classes. The important thing is that you have a perspective, and that you understand the investment characteristics of any investment before you invest money. For example, someone pitches an investment to you. Where does it fit in our above format?

How does it rate in terms of: safety, liquidity, growth and profit potential, income provided and risk? All investment options can be and should be rated in terms of the above to assure that they fit your needs and risk profile.

If you learn how to invest you’ll have a means of supporting yourself for the rest of your life. Once you have a sound understanding of investment basics you’ve built a great foundation for learning how to invest. The best investment guide would cover both.

Investing for beginners is like learning how to swim. Not recommended: jumping in over your head in choppy waters off the coast of Maine in January to learn the butterfly stroke. Suggestion: learn to float first, getting your face wet under calm clear water.

Don’t try to learn to invest by speculating in the stock market or in the bond pits, either. Start investing in mutual funds where professionals pick the stocks and bonds for you. These funds are designed for the investing public. In my opinion, at least 95% of the investing public is best off investing here. Mutual funds simply pool money from investors and manage a portfolio of securities like stocks and bonds for the investors. You simply invest money in a lump sum, like $5000; or periodically, like $200 per month. The money you invest buys you shares in a fund.

The vast majority of funds fall into one of four categories based on what they invest in: stocks (also called equities), bonds, money market investments, and a combination of all of the above. For example, if you invest money in an equity fund, just about all of it will likely be invested in stocks.

Equity funds are the riskiest and have the greatest profit potential, with growth and perhaps some income as their primary objective. Bond funds invest in bonds to earn higher income for investors at a moderate level of risk, generally. Money market funds are the safest and pay interest rates that vary with interest rates in the economy. Balanced funds are the fourth category and invest in a balance of the other three major investment asset classes; and this makes them a great place to start investing.

Income or interest earned in a mutual fund is paid to investors in the form of dividends. Most investors simply choose to have their dividends automatically reinvested to buy additional shares in the fund in order to make their investment grow faster. What makes investing for beginners a challenge is that each general fund category has a number of varieties.

Now here’s your basic investment guide to saving money when you start investing. There are two primary costs when you invest money in funds: sales charges called LOADS, and yearly expenses. You pay a sales charge when you buy funds through a representative. For example, you write a check out for $10,000 and hand it to your financial planner who works on commission. Then, 5% comes off the top to pay for sales charges; and each year you are invested, expenses are automatically deducted from your investment. These yearly expenses can be 2% or more of the value of your investment.

Or you can buy NO-LOAD funds directly from some of the biggest and best fund companies in America and pay NO sales charges, with less than 1% a year deducted for management and other expenses. To cut costs even more go with index funds of either the stock or bond variety. Index funds simply track an index of securities, rather than trying to outperform the stock or bond market. Expenses are low because management costs are low; sometimes costing you less than ¼% a year. Plus, index funds have another advantage. You won’t beat the markets, but you shouldn’t under perform them either.

Investing for beginners need not be a game of sink or swim. Call a no-load fund company that deals directly with the public and ask for a free investor starter kit. Then start investing when you feel comfortable, and save cash when you invest money. If you have a limited financial background I suggest you find and read a complete investment guide before you invest.

First get a handle on basic financial concepts, terms and investment basics. Every investment in the world can be evaluated based on just a few simple characteristics. Don’t invest money in anything until you know if it fits YOUR needs for such things as safety, liquidity, growth, and income. Only if you invest informed can you avoid the costly mistakes that are caused by picking an investment that’s not right for you.

Then, as a basic investment guide, focus on stocks and bonds because this is where you are most likely to invest money in the future. Once you have a handle on these securities, its time to get familiar with investment markets and how to invest in them. If you don’t understand the stock market, for example, your knowledge of stocks (equities) is of little value in the real world of investing.

Learning all about mutual funds should be your next step and shouldn’t be difficult now that you know stocks and bonds. After all, these securities are where most mutual funds invest money for their investors. And mutual funds are where most investors invest money in stocks and bonds in 401k plans, IRAs and other accounts. There are thousands of funds to choose from but 99% of them fall into 1 of 4 general categories.

You should also get familiar with other investments like money market securities and annuities before you move from the INVESTMENT GUIDE phase of your education to the INVESTING GUIDE segment. In other words, before you can learn to invest informed you’ll need a clear understanding of all of your major investment options and how they compare in terms of their basic investment characteristics. This is not as difficult as it sounds since the universe of investments can be condensed into only 4 different categories or asset classes: cash equivalents (safe, liquid investments), bonds, stocks, and alternative investments.

Investing is the art of putting an investment strategy together and managing your money at a level of risk that’s within your comfort level. Once you understand the investment end of things you need a game plan in the form of a complete investment strategy. Asset allocation is the single most important part of any strategy; and your portfolio asset allocation over time will be the main thing that determines your success or failure as an investor. Concentrate on learning asset allocation: how to invest money (in what proportion) across the 4 asset classes mentioned above.

Now you’ll also want to learn to apply various investing strategies or tools to help offset risk while earning higher than average investment returns. The two important things to understand when you get started in the learning process are the following. Learning how to invest is easier than you think if you take the subject one step at a time in a logical sequence. Second, learning to invest informed is actually a two step process: learn investment basics, and then learn investing.

Don’t get discouraged if you don’t understand something in an investing article you are reading. Back up and search for another article that covers the topic or area that confused you. For example, if you are confused by an article on bond funds it’s probably because you don’t understand bonds in general. Most people don’t. Most people don’t get much out of an adventure novel, either, if they start reading on page 47.

Take fear and anxiety out of investing. Learn to invest informed.

There are basically four asset classes or investment options. Let’s see where we might want to invest money, and where we might want to lighten up. We start by looking for safe liquid investments like savings alternatives and cash equivalents. Short-term CDs, savings accounts, and money market accounts at the bank are paying less than 1%; and money market securities (like T-bills) and money market funds are paying even less. No investment opportunities here, but a safe place to invest money.

Our second category of investment options is bonds. The average new investor might own bond funds, but unfortunately knows little about them. When you invest money here you earn more interest than above, but you give up the high safety. With interest rates at or near all-time lows you do not want to invest money heavily here, because when interest rates go UP the value of a bond investment will go DOWN.

Stocks (often called equities) are where most investors invest money to earn higher returns and get real growth. In a questionable economy like today’s a blanket bet on the good old U.S. stock market is riskier than usual. In 2009 stocks were up 60% in a matter of months in anticipation of better times ahead. If good times don’t develop, look out below!

You can make money investing in stocks in just about any market because there are always at least a few investment opportunities out there. That said, the odds of a new investor finding them are about nil – unless he or she knows what to look for. When the stock market falls the vast majority of stocks go with it. This brings us to the last of our investment options, alternative investments.

When you invest money outside of the box you are searching for investment opportunities that do not fit into one of our first three categories… alternative investments. With the exception of real estate, the new investor rarely ventures here. Over the past few years professional money managers have paid more attention to these less traditional investments in search of investment opportunities.

In theory, there is always a good investment somewhere. And the world of investing is full of investment options, from aluminum to zinc. To mention a few: real estate, oil, gold & silver, copper, other commodities, currencies, and foreign securities. The good news is that the average investor can invest in these alternative investments by simply owning stocks and mutual funds.

Investing today requires that you pay attention to the trends in various sectors and industries. When the stock market heads south some industry sectors or specialized areas buck the general trend. If gold prices soar gold stocks and gold funds go along for the ride. When basic materials prices or the price of oil goes up, stocks and mutual funds in or invested in those sectors generally follow suit. In a bad U.S. stock market some foreign markets manage to prosper.

Investing today is a challenge as uncertainty remains high. Don’t avoid safe investments just because interest rates are low, and don’t rely heavily on U.S. stocks and bonds. Get familiar with alternative investments. Spread your wings and diversify.

An investment strategy is critical towards building a successful portfolio. The whole reason why you invest is to make money. You need to be a smart investor, have the right knowledge, know what you’re doing, have a plan, and be ready to make the right choices.

Your investment strategy is your plan for success. It is the big picture of what you’re going to do. You need to strategize when you choose investments or else you will be risking bad choices and bad investments.

Why do you Need an Investment Strategy?

An investment strategy is critical for success. Those who make wild guesses are merely gambling and will be lucky to make a low return. You’re objective should be to maximize your earnings. You can’t do that without an investment strategy.

You need an investment strategy in place in order to keep track of your investments as well. Why did you buy those bonds? Why did you make that trade? Why should you choose this stock over that one? When you ask yourself these questions, a good strategy should help you answer them.

How do you Build an Investment Strategy?

When it comes to actually building your investment strategy, it will take some time, effort, learning, and planning. Follow these steps to build your own investment strategy:

Step 1: Decide on your Investments

Before you buy anything, decide what you want to put your money into. Don’t simply say, “I want the best investments.” Be specific. Are you going to buy stocks, bonds, mutual funds, real estate, commodities, etc.? Are you going to invest in one type of security or multiple ones?

The more you invest in, the more time and effort you’ll need to put into it. Keep this in mind when you are choosing a larger variety. Don’t spread yourself too thin or else you will make less money. Investing in a larger variety of securities, companies, etc. will not make you more money. You need to be diversified, but you need to be smart about it, too.

Step 2: Gain a Strong Knowledge of What you are Going to Do

Now that you know what securities you will put your money in, gain as much knowledge as you can about it. Get books, courses, look online, etc. and learn everything you can about what you’re planning to do.

If you are absolutely brand new to this, start with the basics. Even if it takes a few more months before you get started, it will be worth it. It’s better to wait a couple of months and break even or make a return than it is to get started right away and lose a lot of money. If you are worried about gaining experience, work with a free stock market simulation game until you are ready to invest real money. You can find further information on this type of game and get started at the link below.

If you find the information overwhelming, stick with studying one security. For example, stick with learning about stocks and plan to invest in 6 to 10 stocks first. Once you have the whole process mastered and you feel confident about your investment strategy, you can move onto other investment types if you so desire.

Step 3: Device a Research Strategy

Now you are getting into the investment strategy. Design a research strategy. Research is incredibly important for all types of investing. You need to know exactly what you are putting your money into and you need to know that it is a good buy.

When you study, you will also study about research. Once you know how to do it, you can make a strategy. Decide what kind of ratios, financial statement, and other information you will look for. Figure out how each stock, bond, or other investment will need to measure up before purchasing.

Step 4: Determine the Dollar Amount to Invest

Basically, the dollar amount you will invest will depend largely on what you can invest. Obviously, you can’t invest $10,000 a month if you are barely making $3,000 before taxes. Determine the exact dollar amount or the percentage of your income you will invest.

Try to give yourself a goal. Push yourself to invest more and more. If you think you can afford $100 a month, start with that and try to do $200 next month. The more you invest, the more you’ll make. Even a poor investment strategy will do well if you invest a lot.

Step 5: Build your Portfolio

Now it’s time to spend some money, but not in the way that will make you broke. Start buying securities and building your portfolio. After you’ve researched, you will know exactly what do buy. Buy as much of those securities as possible.

Build a strong portfolio. When you are researching, keep diversification in mind to minimize your risk and maximize your gains. Buy companies that show promise for growth or value increase in the future based on your research.

Step 6: Monitor your Portfolio

The beginning of your investment strategy is hardly the end. You will need to continue to monitor your portfolio and make changes as you go. Spend at least 1 hour per week per investment. For example, if you bought stock in 5 different companies, you should spend at least 5 hours per week researching that company.

As necessary, you will be buying and selling stock, or other securities. If you grow unsure about a corporation or you feel you’ve made the most on an investment you can, move on. Don’t lose money.

Most of all, continue studying and practicing your craft. Read all the books you can and take the information in slowly but steadily. Don’t automatically take all information you read or hear as perfect. Use it to help you along with your investment strategy.

Manish Choudhary is 32, married and works for a MNC. Just like the rest of the lot, he has his dreams. His dreams are no different than you and me, he also dreams to live is a plush home owned by him. He dreams to build and decorate his home with his wife and children and family. He wants to give the beast possible education to his children’s. He wants to go on exotic holidays each year and wants to make sure that he has enough funds make his life secure post retirement.

One careful look at his bank balance and spending habits, and we get the clear picture that his dreams are going to stay as dreams and the chances of them turning to reality is in oblivion. His savings pattern is just not sufficient enough to pay for his dreams. Every one has got the right to dream and dream big. But our habits (bad) holds us from achieving those dreams. The only way to achieve our dream is to create wealth. Wealth creation is possible only through wise investment. Lets discuss and understand the thought process that goes into investment and the process to create ways of wise investment.

What shall be the objective of investment?
Investment is one sure-shot process that can make you rich and will enable you to achieve your financial goals of life. The first step before you start your investment activity is to budget your expenses. You shall know the pattern of your spending. The items that makes you most greedy and items on which you have control. How much a movies to costing you each month? what dent your dinning is creating on your pocket? how irrelevant it was when you decided to buy that mobile phone last month? By budgeting your expenses you are actually putting a upper limit to all your expenses so that at the end of the month you can track your spending habits. Objective is to plan your budget and follow your plan. Buy budgeting you not only plan your expenses but also plan your savings. Unless you have savings you have noinvestment. Once you create your realistic budget, start following the same. You will find that you have made a big value addition to you life. You are saving, and when you see your investment grow you will feel proud of your self. Do not think, just do it, it will feel good. Take it from me. The thought process driving your investment is wealth creation for happiness and well being of your family.

What is the process of investment?
Investment has no secret formulae. The rule of investment is have the right information, plan your savings and investment, and make investment on assets. The steps involved in the process of investment is as listed below:

• Budget to Save
• Save and make investment regularly
• Investment shall be for long term
• Control your debts

Why at all we should do investment?
Ask your father and he will tell you the wisest thing he did when he started his career was to open a recurring deposit account in the bank at the start of his career. In those time investment were limited or else people were less informed about investment options and about necessity of investment. Now the days have changed, not only people has become more aware about investment but also the demon of inflation making us think more aggressively about wise investment.

• Inflation is eating away your savings
• Maintain a good standard of living

Inflation eats away your money even when you are sitting and watching your favorite movie. If your have a monthly expenses as on today as Rs 15000 and annual inflation is 5%, 20 years later those same goods will cost you a whopping Rs 40,000. It means for the same set of items today you are spending Rs 15,000 and after 20 years you will have to spend Rs 40,000. Bank deposit gives you a meager return of 6-7% per annum. After considering the effect of inflation and tax you are left with returns which is practically negative. Means investment in bank deposit is making you loose money rather than making it grow. This is not a wise investment.

What is the key to wise investment? 
Warren Buffet is an example of the most successful investment icon of this world. He has not build wealth over night. No one can build wealth over night. To build wealth you must remember those steps of investment, budget to save, save to invest, invest long term and control your debts. But this is for sure that all rich people did something very different than most of us. We will discuss few such wise investment to-do’s

Start the process of investment as early as possible.
Lets take example of two friends, Ritu and Manish. Ritu started saving and investment of Rs 750 per year from the time she was just 15 years of age. After 15 years (when she was 30) she stopped investment. She allowed her investment to grow without any additions and withdrawals.

On the other hand Manish started investment of Rs 5,000 per year when he was 30 years of age and continued his investment of Rs 5,000 till 60 years of age.

Assuming both earned a steady return on investment @ 15%, Ritu’s portfolio was a massive Rs 27.7 Lakhs by the time she reached 60 years of age. Manish accumulated wealth when he aged 60 was Rs 25 lakhs. The key to wise investment is give more time to your money to make more money.

Get the benefit of compounding of money

Once there was a king and a farmer. Both of them were good friends since childhood. One day they were playing chess and the farmer played a good game and defeated the king. King was very impressed with the farmers game and he asked the farmer to choose his reward. The farmer was very clever. He asked the king to give him 1 grain of rice for the fist square of the chess board. 2 grains of rice for the second, 4 grains of rice for the third, 8 grains of the rice for the fourth and so on till the 64 squares are complete. The quantity of grain that was required to fill was 18,446,744,073,709,551615.

Suppose you have Rs 1 today. Every year your money doubles, then at the end of 64 years, your investment of Rs 1 today will become Rs 18,446,744,073,709,551615.

This is the power of early investment compounding of money. Lets take a more practical example. Assuming your father gave you Rs 1,000 on your 10th birthday. As you was to young to handle that money he decided to make a fixed deposit of those Rs 1,000 for next 50 years. Fixed deposit gave a steady return on investment @ 8% per annum.

• Your investment of just Rs 1,000 today will become Rs 47,000 in 50 years
• Your investment of just Rs 5,000 today will become Rs 2,35,000 in 50 years
• Your investment of just Rs 20,000 today will become Rs 9,38,000 in 50 years