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Investing in securities can broadly be classified as investing in bonds and stock market investing. How much you apportion for each depends on your risk taking capacity. Bond investing is safer compared to stocks but bonds give lower returns, particularly during inflationary times. Stock market investing, on the other hand, can be quite profitable but come with more risks: stock prices tend to fluctuate often. Some of your money should be invested in bonds, while your balance money should be invested in stocks. The younger you are, the more you should opt for stock market investing, investing more in bonds as you get older. When investing in the stock market you should invest in shares of companies with a potential for growth and a good track record. There different sizes and categories of shares- large, mid and small caps and penny stocks. A beginner should invest in large and mid cap companies and he can consider investing a small portion in small caps and hot penny stocks only after he has gained experience. These small caps and hot penny stocks are the riskiest but give the largest returns if handled properly which needs expertise and nerves of steel. Stock market investing is not something you jump right in; you have to start spending time to learn the basics of stock market investing and its various aspects. As you gain knowledge, start investing small amounts of your money over a period of time rather than investing all the money at one go. Bond investing is quite easy as compared to stocks. You can get a list of high rated companies and government bonds from your banker or broker easily. Bonds will give you a good return only if you hold them for a long time period. On the other side people wanting returns in short period can look for investing in stocks and at the same time stocks can be held for long time too. Do not consider the tips from others on which share to buy especially in the case of riskiest investments such as hot penny stocks. You can consider these risky investment options only after thorough research on the company concerned and all other related factors has been done. Have a good time investing!
Article Source: http://www.financemanual.com
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