Beginning Investing

If you've recently started to live and work in the dreaded real world. You may have started making money and started hearing your coworkers or friends talk about investing. Although it can be intimidating to manage your money in such a risky way, especially if you are not sure what you are doing. However, there are many great places you can start looking for investing tips.

One is an educational website, Investing in Stocks. Another is Yahoo's beginners' guide to finance, which offers a much more in-depth overview than does this article: Learn the Basics of Investing.

One of the first things to do is to figure out how much of your monthly budget you can afford to spend on investing. The way to do this is to first allocate other expenses to your budget, such as housing, car payments, and an emergency account. This can be done with a simple budget, or with an online bill manager, such as the one featured on this site. You should have about 20-30% left over after all is said and done, including entertainment and food. The simple answer is to invest how much you feel comfortable with.

Here are some steps to follow when deciding to invest.

1. Decide what your purpose is in investing. Do you want to make money as soon as possible and withdraw it immediately, or do you have a more long-term plan in mind, such as setting aside money for retirement?
2. Depending on your goals, you should go for high-tech and big corporation stocks (for the short-term) and blue-chip stocks (well-established companies with stable earnings and no extensive liabilities or debt. Companies in this group include Coca-Cola, IBM, and Proctor and Gamble.) Another option is mutual funds. This is a pool of stock that takes a group of companies, bonds, and short-term money equivalents into account and is managed by one broker. The dividends (investor's shares) are then passed along to you. These tend to be used more for retirement purposes.
3. Keep in mind that you have to have discipline to consistently make money in the stock market and be involved in the long-term because markets have a tendency to increase steadily in the long-term, but provide losses in the short-term.
Two common ways invest to begin with $50 a month, with no lump-sum. This can usually be invested in mutual funds, which are groups of stocks managed by experts. Another option is to invest a lump sum of several thousand dollars, usually into funds that have minimum requirements.
4. Make sure to consult with a broker, or, if you don't have that much cash to spend, a professor of finance at the very least, before plunging all your money into one venture or company. Along with their advice, go with your instinct. Invest in stocks of companies that you are familiar with and whose products you use every day. Follow up on your investments with some simple analysis of financial ratios. It may be useful for you to take a simple finance class, just so you can understand the terminology of trading.

If this sounds intimidating, it is not meant to be. Just keep in mind that if you are thinking of parting with at least $1000 of your money over any long period of time, it's good to invest time in researching how your money is invested.