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| *The Commerce Journal>>>Investing |
Bank bonds.. advice? |
im 18 years old and have been learning in economics and from my parents of course that i need to invest some money so that it'll grow and ill have at least a little bit of something for the future.. At your age you should be investing 80-90% of your funds into stocks. They have higher rates than bonds. I'm guessing you haven't taken many classes yet where you've learned how to read financial statements or value bonds so look into mutual funds. They have more fees than buying stocks yourself, but you get a fund manager to look at the financials for you and they would be more diversified than you can probably afford buying them yourself. The fund will also be suited for your age if you get the right one. An 18 year old should not be investing in bonds. The standard advice is when you are young invest in growth stocks for, obviously, growth because you are not worried about income. When you are old invest in stocks that generate dividends or bonds to generate retirement income. As you age, gradually modify the mix. an 18 year old person should be putting money in stocks you can invest money either in fixed deposits in banks or bonds to earn fixed income. bonds are fixed income generating instruments and you are required to hold them for a specific time frame. they give you a fixed gain called coupon interest. you can even buy treasury bills to secure a risk free return but all of these including bank deposits generate less than 10 % Per annum as income. if you are interested in higher returns, give equities a thought. The equity index including US markets have grown by 12% last year. I believe u can enter equities after a slight correction takes place and buy securities with lesser PE ratio than the market index. Information tech stocks are now less expensive. Banks are reporting losses due to subprime. If the american economy survives this recession, i believe banking stocks can give you a lot of returns. Keep a watch on Banks. Happy investing and happy new year. |
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