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Financial Literacy - Feature Article

Investing Basics

by Lauren Podolsky, Financial Wellness & Literacy Editor

All of us want to have a surplus of money someday.  You work hard for the majority of your life in hopes that one-day you’ll be able to sit back and comfortably live without bills, debt, or any other looming financial troubles. But how does one reach the point of financial freedom in their retirement years? Investing of course! 

So why is investing now a smart idea? Simply put, you want to invest in order to create wealth. It's relatively painless, and the rewards are plentiful.

Here are a few key factors that will help you get on the right path to investing. 

Invest in Stocks –

Without a doubt, owning stocks has been the best way historically to build wealth. Stock is a share in the ownership of a company. It represents a claim on the company's assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing. As an owner of a company’s stock, you are entitled to your share of the company's earnings as well as any voting rights attached to the stock.

Invest in Bonds –

A Bond is an 'IOU' in which an investor agrees to loan money to a company or government in exchange for a predetermined interest rate.

Investing in bonds has been considered one of the safest ways to make money for a long time. When you buy a bond, you are lending money to the company or institution that issued it. Sometimes bonds are the only decent option to gain suitable interest on your investments. The interest rates on bonds are typically greater than the rates paid by banks on savings accounts. As a result, if you are saving and you don't need the money in the short term, bonds will give you a relatively better return without posing too much risk.

Invest in Money Market Accounts –

Many financial institutions offer a high yield savings account, often referred to as a Money Market or Money Management account. These accounts will pose a higher interest rate, yet may come with more stipulations such as a higher minimum balance or fees for withdrawing.  If you want to build a savings without worrying about deducting from it, a Money Management account may be the right option.  

Invest in the Stock Market 

The stock market is probably the most complex of all of the investing techniques we’ve discussed, but it can also bring the most rewards.  The one downside – it’s a risk.  Your profit is almost never guaranteed and there can be many determents if not managed properly.  Before you begin buying stock, make sure you take some time to understand how it works.  There are many stock market games available that can help you learn the basics and also turn out to be a lot of fun! 

Once you learn the basics of managing your money, the rewards of self-constraint in investing can be the most beneficial to your financial future! 

If you have other tips we should add to this list, or any questions or comments, please Contact Us

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Lauren Podolsky - Financial LiteracyAbout Lauren Podolsky: With over 10 years as a blogger and Financial Literacy adviser, Lauren lends her money tips and financial Q&A insights here on Stage of Life each and every month. For more healthy tips, recipes and advice, check out Lauren's personal site at where she shares her love of food, staying fit and living a healthy and balanced life.

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