Basics of Investing

Hello everyone, Josh here. Let’s talk about the very, very basics of investing. We will expand on each of these topics over time.

The first thing you will need to understand is how to build a balanced investment portfolio. There are 4 separate pieces of the pie that will make your portfolio complete. They are Savings, Bonds, Stocks, and Real Estate. I will go quickly over each.

Savings. The purpose of having a savings account is for emergencies. When something happens and you need cash, you do not want to liquid (or sell) your stocks or bonds. The savings account allows you to cover the necessary expenses. Also, if you are saving for a house or big-ticket item, you will want to save you money in a high yield savings account.

Bonds. Bonds are similar to savings. They are considered fixed income. You buy a bond and get paid interest over the course of the year. As you near retirement you want to have a greater allocation of bonds. US government bonds pay the least but are the safest. Other bonds may pay more but maybe riskier. Bonds are a great way to hedge against fluctuations in the stock market.

Stocks. The stock market is huge! There are so many different stocks, electronic traded funds (ETFs), and mutual funds. This is the growth portion of your portfolio. There are tons of ways to make (or lose) money in the stock market. Do not be afraid. Read, learn, and invest. Remember only put money in the stock market that you are willing to lose.

Real Estate. Real estate, in my opinion, is the true money maker. I think it is by far the simplest way to build wealth. However, you have to be ready to commit. Understand that owning a home is time, money, and work. But it is truly worth it. I will show you how to make your house earn for you. Exploit your home to make even more money and grow your wealth.

Now you know the basic fundamentals of building a balanced portfolio, so let’s talk about how to start investing.

Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice.  I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article.