A Primer of Simple Investments

August 29, 2012


A Primer of Basic Investments

In today’s economy, you need the income from your investments to fund your retirement. You cannot depend on social security income to pay your expenses after retirement. Social security just barely covers your basic living expenses – if at all. Whether it’s medical expenses, the desire to travel or even the desire to have more than just a minimal life style, you’ll need some additional income. You must have a financial plan – a road map to get you to where you want to be. This means you must be aware of and understand the different kinds of investments available to you.

Here’s a brief description of some options.

Retirement/401K Plans

Many employers offer 401K plans. Money is deducted from your paycheck on a tax deferred basis. It is then invested for you in a variety of ways. Some employers will even offer matching funds to really help put building your next egg on the fast track.

Life Insurance Policies

Life insurance policies are an important part of estate planning, especially if you have a young family. Should you die, money will be available to your survivors to help them maintain their life style.

Corporate Stocks

Purchasing stocks gives you ownership in companies. Historically, stocks have been a substantial portion of many individual’s portfolios. Many companies also offer dividend re-investment plans that will help grow your nest egg for you.


Bonds are promissory notes issued by a municipality, the federal government or private companies. Bonds come in several varieties. Some are tax exempt. All bonds are rated according to their safety. Research any bond before you invest in them.

Mutual Funds

Generally, mutual funds are a “basket” of funds from several different companies. Research any mutual fund you’re interest in – different funds have different goals, investment philosophies and, as a consequence, have different track record.

Money Market Funds

One short-term investment is a Money Market Fund. These are offered by banks and investment companies. They often work much like a checking account and pay a nominal amount of interest.


Annuities are generally available through insurance companies. Terms vary from company to company and between the various types of annuities. Generally, an annuity is an investment that pays a specified amount of money on an annual basis.

Certificates of Deposit

When you buy a CD, you agree to deposit a specific amount of money for a specific period of time. CDs pay a higher rate of interest than savings account. If you do redeem a CD early, however, there is a penalty.

Real Estate

Be careful about investing in real estate. Lately, values have declined and owners have found themselves “underwater” – they now owe more on the property than they can realize in a sale.

These are just of a few of the options available to you in investing. No matter what you decide to do, do your research first. There are many sites on the Internet that will provide you with basic information – the rates being earned by CDs for example.

It is important to realize that you must save for your retirement and the sooner you start, the better.

Larry Haywood operates the site which is a stock market tips site. Check out our latest article: Biggest Daytrading Mistake.

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