The big picture
If you think investing is for other people, here's another way to look at it: Investing is a tool to potentially help you grow your money and thereby achieve your dreams. It doesn't matter if you're saving to take a vacation, buy a home, or retire comfortably—investing wisely can help you get there.
Before you begin, it's important to understand that investing
is different from saving
. Whereas saving implies parking your money in a safe and liquid account, investing combines the opportunity for increased growth with increased risk.
Sometimes more risk means the potential for more gain—but not always. As an investor, perhaps your most important job is to understand when the risk you're taking on is giving you the opportunity for greater return—and when it isn't. To be a successful investor, you want to take on only risk that is appropriate for your situation and that carries the potential for commensurate return.
You don't necessarily need a lot of money to get started. Here are three general guidelines for every investor:
Decide what's important to you.
Start by setting goals
. When you have a tangible idea of what you want to achieve, it will be easier—and more rewarding—to go about achieving it.
Understand the basics.
The principles of investing
don't change. The economy changes, markets change, your own needs and goals may change—but the strategies you use to meet those goals and handle market fluctuations remain the same. Learn them once, and you've learned them for good.
Keep a long-term perspective.
Investing is not a quick fix; it requires an ongoing commitment. You need to stick with it to get results. But the results you're working toward are real and related to your life, helping you take care of yourself and your family now and in the future.
Don't know where to begin?
When you're first starting out, the new words and concepts may seem overwhelming. If you are new to investing, or just feeling a bit rusty, start with a few of the building blocks: stocks, bond and cash
Ready to move on? Explore mutual funds and ETFs
After that, you'll be ready to create your own investment plan.