Simple Investment Methods
General October 9th, 2008Investing is quite simply, one of the best ways to grow your wealth. For many, the prospects are both intriguing and intimidating. Whether it is high-risk, short-term investments, or low-risk, long-term investments, having the right knowledge, experience, and strategy is vital to success.
When it comes to investing, the first step is to choose the method of investment. The most used investment strategy is the ubiquitous 401k plan, which is a retirement investment plan where the employer may choose to contribute as well. The most common 401k plan is known as the participant-directed plan, in which the employee may choose what to invest in. The investments available for a 401k include mutual funds, money market, and bonds.
Another way to invest is through a brokerage account. A brokerage account is a way to purchase stocks, mutual funds, etc, by instructing a professional (your broker) to purchase for you. In order to trade, a commission is required for each transaction.
These commissions can vary widely, from as low as $9.99 to hundreds of dollars. The least expensive brokers are online, such as E-Trade, which charge between $6.99 and $9.99 for stock and options trade. Second in the list are the discount brokers, in which the average commissions are around $46. The most expensive brokers are full-service, such as A.G Edwards, and the average commission for these services is $111.
In general, 401k plans are best for those who don’t want to enter investing as a hobby, whereas brokerages are perfect for involved, serious investors. Be aware of the risk when trading or investing, and carefully consider all transactions.
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