Financial Focus: What do new investors really need to know? - Ahwatukee Foothills News: Money

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

Financial Focus: What do new investors really need to know?

Print
Font Size:
Default font size
Larger font size

Related Stories

Posted: Saturday, August 10, 2013 3:45 am

If you’re starting out as an investor, you might be feeling overwhelmed. After all, it seems like there’s just so much to know. How can you get enough of a handle on basic investment concepts so that you’re comfortable in making well-informed choices?

Actually, you can get a good grip on the investment process by becoming familiar with a few basic concepts, such as these:

• Stocks versus bonds. When you buy stocks, or stock-based investments, you are buying ownership shares in companies. Generally speaking, it’s a good idea to buy shares of quality companies and to hold these shares for the long term. This strategy may help you eventually overcome short-term price declines, which may affect all stocks. Keep in mind, though, that when buying stocks, there are no guarantees you won’t lose some or all of your investment.

By contrast, when you purchase bonds, you aren’t becoming an “owner” — rather, you are lending money to a company or a governmental unit. Barring default, you can expect to receive regular interest payments for as long as you own your bond, and when it matures, you can expect to get your principal back. However, bond prices do rise and fall, typically moving in the opposite direction of interest rates. So if you wanted to sell a bond before it matures, and interest rates have recently risen, you may have to offer your bond at a price lower than its face value.

For the most part, stocks are purchased for their growth potential (although many stocks do offer income, in the form of dividends), while bonds are bought for the income stream provided by interest payments. Ideally, though, it is important to build a diversified portfolio containing stocks, bonds, certificates of deposit (CDs), government securities and other investments designed to meet your goals and risk tolerances. Diversification is a strategy designed to help reduce the effects of market volatility on your portfolio; keep in mind, however, that diversification, by itself, can’t guarantee a profit or protect against loss.

• Risk versus reward. All investments carry some type of risk: Stocks and bonds can decline in value, while investments such as CDs can lose purchasing power over time. One important thing to keep in mind is that, generally, the greater the potential reward, the higher the risk.

• Setting goals. As an investor, you need to set goals for your investment portfolio, such as providing resources for retirement or helping pay for your children’s college educations.

• Knowing your own investment personality. Everyone has different investment personalities — some people can accept more risk in the hopes of greater rewards, while others are not comfortable with risk at all. It’s essential that you know your investment personality when you begin investing, and throughout your years as an investor.

• Investing is a long-term process. It generally takes decades of patience, perseverance and good decisions for investors to accumulate the substantial financial resources they’ll need for their long-tem goals.

By keeping these concepts in mind as your begin your journey through the investment world, you’ll be better prepared for the twists and turns you’ll encounter along the way as you pursue your financial goals.

• This article was written by Edward Jones for use by Ahwatukee Foothills Edward Jones Financial Advisor Kim DeVoss, CFP. Reach her at (480) 785-4751 or Kim.DeVoss@edwardjones.com.

More about

More about

More about

  • Discuss

PD: Ahwatukee woman takes $130,000 from business, focing it to close

PHOENIX - An Ahwatukee woman is allegedly to blame for the closing of a Valley company after she embezzled $130,000 from the business. Police …

Published: July 26, 2016 - 2:44 pm @ http://www.abc15.com/news/crime/pd-ahwatukee-woman…

Group steps up to help Arizona foster children get the education they deserve

Tens of thousands of Arizona's children are in foster care, and one of the biggest issues they face is getting a good education. Maria Rodrigu…

Published: July 26, 2016 - 2:35 pm @ http://www.abc15.com/news/region-phoenix-metro/cen…

These Are the Best Cities to Become a Real Estate Mogul on a Budget

These days everyone wants to be the next big-time real estate mogul. And why not? It entails a lifetime of partying with the Hollywood elite, …

Published: July 26, 2016 - 2:14 pm @ http://www.realtor.com/news/trends/invest-in-real-…

In Phoenix, an ambitious plan aims to cover 25% of the metropolis with tree shade

This Southwest capital presents a distinctive postcard: brutal heat, desert peaks, sprawling subdivisions and endless asphalt. Richard Adkins …

Published: July 26, 2016 - 2:09 pm @ http://www.latimes.com/nation/la-na-sej-phoenix-ar…

Hillary Clinton, Bernie Sanders, and What Must End Before Any Revolution Can Happen

Heckling progressives is not the way to fix our problems. Ending partisan gerrymandering is. Last night, through portions of the opening night…

Published: July 26, 2016 - 2:09 pm @ http://www.towleroad.com/2016/07/gerrymandering/

Democrats: A Price on Carbon is Half of the Solution

Watch My Testimony to the DNC I spoke to the DNC Platform Drafting Committee about the carbon rebate and support from young voters for this st…

Published: July 26, 2016 - 2:03 pm @ https://medium.com/@camilathorndike/democrats-a-pr…

Tim Kaine Took a Stand Against Cul-de-Sacs

Even though the Democratic Party’s strongholds are in cities, we probably won’t hear much about urban transportation and development policy at…

Published: July 26, 2016 - 2:07 pm @ http://www.streetsblog.net/2016/07/26/tim-kaine-to…

Phoenix Designer Liz Magura on Why Grade Schools Need the Arts

Becky Bartkowski A A Every other year, New Times puts the spotlight on Phoenix's creative forces — painters, dancers, designers, and actors. L…

Published: July 26, 2016 - 1:43 pm @ http://www.phoenixnewtimes.com/arts/phoenix-design…

Chicago pizzeria, Gino's East, to open restaurant in Phoenix by the end of the year

PHOENIX - Attention Phoenix, Chicago pizza is moving to the desert. Gino's East, a Chicago pizzeria that is celebrating its 50th anniversary t…

Published: July 26, 2016 - 1:44 pm @ http://www.abc15.com/entertainment/events/chicago-…

Arizona Cardinals place Tyrann Mathieu, 3 others on Physically Unable to Perform list

With training camp set to begin Thursday, the Arizona Cardinals placed four players, including All-Pro safety Tyrann Mathieu, on the Active/Ph…

Published: July 26, 2016 - 1:39 pm @ http://www.abc15.com/sports/sports-blogs-local/ari…

Facebook

ahwatukee.com on Facebook

Twitter

ahwatukee.com on Twitter

RSS

Subscribe to ahwatukee.com via RSS

RSS Feeds

Spacer4px

Most Popular

Online poll

Loading…