How much money you should invest, while starts your investments are depend upon two main factors. It depends upon your capability to invest money and certainly your financial goals. Many investors, who are beginners in investments thinks that , they should invest all of their savings to start investing .It is not necessary to start investments by putting all of your savings from your savings bank account to the new investment plans. Actually, it is not a wise decision.

First, spend some time to determine how much money you can presently afford to invest is very important. If you have some good savings to use for investments, it is truly enormous. However, you don’t want to scratch yourself small when you bind your money up in an investment.

It is a wise decision to keep three to six months of living expenses in a readily reachable savings account. I strongly recommended that don’t invest that money, what be your savings initially intended for. You may necessitate to lay your hands on in a hurry in the future.

So, start on by determining how much of your savings be supposed to continue in your savings account, and how much can be used for investments. Unless you have funds from another source, such as an inheritance that you’ve recently received, this will possibly be all that you at present have to invest.

In the next step, find out how much you can adjoin to your investments in the future. If you have a invariable monthly income , you can occupy a slice of your income to fabricate your investment assortment over time. A financial planner can help you to set up a budget and work out how much of your future income you will be able to invest.

With the help of a financial planner you can persuaded that you are not investing more than you ought to – or less than you be supposed to in order to reach your investment goals.

For many types of investments, a definite initial investment amount will be mandatory. If you carefully examine and you have found an investment that will ascertain to be sound , you will probably recognize what the essential initial investment is.

If the amount of money in your hand is not fit for put up with your initial investments , you are advised to transform your investment plan to another investment plan which perfectly fit for your capacity to invest. Remember , never lend money to invest, and never use money that you have not use up for investing.

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Investing in bonds are consider the safest way to park your money and you will get a good return against your investment.  There are four types of bonds are available for investment .

1. Bonds issued by the government.
2. Bonds issued by the corporations.
3. Bonds issued by the state and local governments.
4. Bonds issued by the foreign governments.

The main magnetism and benefit of bonds is that, you will get your initial investment back. So most of the people who are newer in investments are prefer the bonds to invest their money and they feel a low risk tolerance.

You can purchase treasury bonds  issued by the treasury  department of United states government with maturity period ranging from three months to thirty three years.

These treasury bonds are supported by United states government  and you have to pay the tax on the interest that the bond bring in. These treasury bond includes

1. Treasury  Notes (T-Notes)
2. Treasury Bills (T-Bills)
3.  Treasury Bonds.

A corporate bond is in soul a company selling its liability. These  are bonds are sold through public securities markets and have high interest rates.  But when compare to the government bonds , corporate bonds carries some risk factors. If the company goes belly-up, the bond is insignificant.

The bonds issued by the state and local governments are usually comprise high interest rates. This is because State and Local Governments can in fact go bankrupt – unlike the federal government.

If you are panning to invest in a tax free bond, the bonds issued by the state and local governments is the right choice . You need not pay any tax on your investments even on the interest. Because these type of bond are totally free from income tax. Tax-free Municipal Bonds are the good illustration of this kind of bonds. State and local taxes may also be waived.

Purchasing foreign bonds is in fact very hard, and is often done as part of a mutual fund. It is often very risky to invest in foreign countries. The safest type of bond to acquire is one that is issued by the US Government.

The interest possibly a bit minor, but again, there is little or no risk involved. When a bond reaches maturity, reinvest it into another bond will generate better result.

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If you are planning to start your investments with low risk tolerance, without having enough knowledge about the stock market, my advice is, start it by being a conservative investor in the bank. This will offer you a way to building your money grow while you learn more about investing.

Open an interest bearing savings account in a bank. A savings account ought to pay 2 – 4% on the money that you have in the account.

Certainly, it is not a big money unless you have millions of dollars in your account, but it is a good start with money building money.

In the second step you can invest the money in market funds through your bank. It works the similar ways the savings accounts do. The main attractions of market funds are:

1. These funds have higher interest rates than saving accounts.
2. They are short term investments, so your money will not be blocked in a long term, and certainly, this is also a money building money.

Certificates of Deposit are another way to invest your money with low risk tolerance. The interest rates of Certificates of Deposit are higher than savings accounts and Money Market Funds.

The main attractions of Certificates of Deposit are:

1. You can select the period of your investment.
2. Interest is paid often until the CD reaches maturity.
3. CD’s can be purchased at your bank, and your bank will insure them against loss.
4. When the CD reaches maturity, you receive your original investment, plus the interest that the CD has earned.

One of these three types of investments is the better way to start investments with low risk tolerance for beginners who have less knowledge about stock market. The main advantage offered by these investment methods to beginners is that, it will allow your money to start building money for you while you learn more about investing in other places like stock markets.

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Any stock broker or financial planning experts knows that every human beings have a risk tolerance. These experts encompass a good role to find out good investment plans that not exceed your risk tolerance .

How can we find out the risk tolerance capacity of an individual ?. It depend upon the financial capacity to invest money and certainly , your financial goals .

For example Mr. Scott planning to retire in 5 years but he has not saved much money for his after retirement life . In the other hand Mr. Matthew is very young and he cover a plan to start invest for his retirement.

Considering the cases of Mr. Scoot and Mr. Matthew, we can say that Mr. Scott need to have a high risk tolerance, because he need to do some innovative and challenging action of investment to reach his financial goals. But in the case of Mr. Matthew , his risk tolerance is very low; he can enjoy watching his money grow slowly over time.

In the above story we can understand that , Mr. Scott need for a high risk tolerance and Mr. Matthew need for a low risk tolerance . But keep in mind , what every they need a high risk tolerance or a low risk tolerance actually has no manner on how they feel about risk , it certainly a lot in determining their tolerance.

For example, if you invested in the stock market and you are watching the movement of your stock daily and painfully know that it was dropping indecisively , what would you do?

If you have a low tolerance for risk, you would want to sell out… if you have a high tolerance, you would let your money traverse and see what happens. These decisions has no relation with your financial goals this is strictly based on how you feel about your money.

So , a good financial planner or stock broker should help you determine the level of risk that you are relaxed with, and help you choose your investments consequently.

Your risk tolerance should be based on what your financial goals are and how you feel about the prospect of losing your money. Actually these are the two sides of the same coin.

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Last month a client Mr.Pete Simpson came to me in regards to advice for investing his wealth of £300,000 which he raised from a sale of his property. He was looking towards retirement and wanted a risk free investment.
Mr Simpson wanted to know what are the types of investments  which offers a steady non-risky  monthly income with no possibilities of eroding away  the capital invested.

However, the situation is complicated by the fact that Mr Simpson plans move abroad for more sun in four years of time and he needs to access his money to make his fun in the sun dream come true.

These are the questions which I put across to him

• Decide how much monthly income needs to be generated, and for what all purposes.
• Will this be the total income, or as a supplement income from other sources?
• Will any fluctuations in the level of income be accepted?

I wanted answers to the above question to proceed on with a solution.
You also have to determine how you wish to utilize the money in four years of time.

Is it to buy property abroad, or to invest it for long-term income?

Always remember the capital preservation alone will be a bad idea. If you spend all the interest generated, the value of your capital will
Remember that capital preservation can leave you worse off. If you withdraw and spend all the interest generated, the value of your capital will be diminishing in real terms because of inflation.
Once you have identified your need for income, you should keep aside enough funds to cover the requirements for the first year atleast. This can be kept in an easily accessible bank account.

You can put away up to  £93K for tax free returns without any risk to capital. You can do this by the combinations of National Savings, Cash ISAs, premium bonds & savings certificates.

You can save upto £3000 in an year in mini cash ISA.

Over the next five years you can invest up to £15,000 in ISAs.

Going for gilts

You could also consider short-dated gilts .

Gilts are bonds issued by the government. This is provided in return for your loan to the government. The government always pay a fixed rate of interest for the period you hold the gilt.

Gilts are considered very safe investments. There is no chance that a government can go bust.

The actual percentages would depend on your answers, but he would like to divide the money as 40% in notice accounts, and 60% easy access deposit accounts.
There is no guarantee that you will get your capital back under all circumstances. That is why gilts can seen as safe investments rather than a safe savings.

The actual percentage on investments on savings would depend on your personal circumstances, but Mr Simpson was suggested to divide the money as 40% in notice accounts, and 60% easy access deposit accounts.

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If you want to be succesful in stock market trading , Remember the following tips

• A Stock Market trader should have a trading plan should do homework diligently

• A Stock Market trader should avoid overtrading

• A Stock Market trader should not get unnerved by losses

• A Stock Market trader should capture the large market moves

• A Stock Market trader should be always be a learner

• A Stock Market trader should make some money with less risky strategies also

• A Stock Market trader should treat trading as a business and be positive always

• A Stock Market trader should not blame the market

• A Stock Market trader should keep losses small. Remember all huge losses always start small

Good Luck !!!

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Venture Capital Trusts aka VCTs is an exciting and speculative area for investment where investors can avail a potential tax break when investing in small companies.

They give a chance for the investors to make an investment in a very young company and reap the profits if it grows in value and revenue.

VCTs are a high octane investment and should be considered very carefully.

VCTs usually invest in unquoted companies which can be some of the most fast growing and dynamic companies in United Kingdom. These firms are quoted on the AIM and OFEX indexes.

Inorder to encourage young companies and for them to receive funds, investors in VCTs are given generous tax breaks.

An upfront tax rebate of 40% is given to investors.

If you invest £1000 , this will just cost you £600 by the time you have received your tax rebate.

Any dividend or capital gains from VCTs are tax free.

But the catches are as follows

To obtain the tax credit, investors need to keep their money in VCTs for a minimum of 3 years.

Tax breaks are only provided on Initial investments.

VCTs usually invests in companies which look forward to raise between 500 K and £10 million.

Don’t invest in a VCT for just getting the 40% tax rebate.
Inland revenue considers differently companies worth under £15 million. Usually between 3 and 7 years, venture capitalist will either sell the business or float the stocks on the stock exchange.

Any profit or dividend is paid back to the the investor which is TAX FREE

The common trent is that the venture capitalist will repeat the same process witha different company.

There is a limit on a VCT that a maximum of £1m per tax year can only be invested in a company.

Since VCTs invest at a very early stage, the future of the company cannot be known for sure and hence posess a high risk.

VCTs should be considered as an investment option for people who are looking for long term investments. These might not be the right investment for everyone.

With VCTs most of the buyers buy and hold the shares and hence there is very limited market for VCTs.

Often VCTs will be sold for fraction of the price of the asset..

Do enough research and decide whether VCTs are the right investment for you . Don’t just go for the 40% Tax Break.

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There are different factors to consider to determine where you should invest your funds

As the first step, research what are the options available to invest depending on your risk tolerance , investment style and most importantly your financial goals.

If you were to purchase a new car or house, you definitely do loads of research before you buy. Like understanding the features , doing a test drive in case of car. Or look on the area, schools near the house etc. I would recommend you to do even more research if you are considering to invest a considerable amount of your money. The more research you do could lead into more planning and getting more better results.

You should also study the history of various investors who have done similar investment. Try to learn from their mistakes. It is a common sense.

Researching about stock market is tedious, but that time will be well spent. There are loads of information on the internet. Lots of books are also available on the topic. You may even consider taking a college level education on it - which is what stock brokers are supposed to do.

On internet there are some websites which provides you access to their site and play on the real stock market with dummy funds. You may invest real once you really feel comfortable with the trading.

To find sites which offer these services - Try searching ‘Stock Market Games‘ or ‘ Stock Market Simulations‘ in any search engine. Many new sites come every so often.

Enter your search terms Submit search form

Other types of investment other than the stock markets don’t have any simulators unfortunately. Probably in future they might be available. Right now you may gather more information by watching the market, reading and consulting with other investors or a financial advisor.

Read anything which you find on investment. But don’t get lost with the immense information available on the internet..

Finally before you make investment, consult with a financial planner or advisor who will help you setting goals and also will provide relevant information various investment options depending on your needs. And you will definitely improve along and learns things on your way !!!

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Broadly Investments can be categorized into three

- Stocks , Bonds & Cash Investment

Not that simple as it sounds. It gets complicated underneath. Each type of investments has various types of investments which fall under each of them.

Learning about various investments is a huge topic. I can write a couple of books about them. But here I give an overall picture of the various investment types & investors.

Stock market can be bit scary if you are not an investment savvy. Fortunately there is plenty of information available and financial planners and stock brokers are available at very competitive rates.

Like investment , there are three categories of investors -

Conservative - Who deals with low risk investment and the profit margin for them will be lower compared to the other two - They usually deal with Cash and invest their money in high interest bearing savings accounts, mutual funds, Money market accounts , Post office Savings etc. These are investment with the lowest risk but will take a long time for the money to grow.

Moderate - These are type of investors who invests in cash and bonds and they may even trade stocks in the stock market. They also invest in real estate provided the real estate market is stable and low risk in the area they are investing. They even do investment in social lending in companies like Zopa.

Aggressive - These are the investors who are mainly traders in the stock market which is a high risk business. They even invest in new business ventures and also in high risk real estate. For example if we take the example of real estate business - Aggressive investors might buy an old apartment invest money to renovate expecting to increase the value of the apartment and to give out for rent. This is considered as a high risk investment, but if it works will return a huge profit.

If you are planning on investing, do your homework and decide on which path you are going to take. And what type of investor are you planning to be - Conservative, Moderate or Aggressive ? You may move to different type of investor role in future. Watch out for trends. Understand the risks and balance out on the returns.

If you have done enough research, work hard and you are watchful, there is very less chance for failure.

Learn from the mistakes others have made . Sometimes they are not worth making.

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When it comes to investing everyone wants to do the right investment for them which could provide the right returns at the right time. Unfortunately very few investors are successful. People who have done their homework researching on the investment plans which they are likely to invest are often successful. With the internet and computer in front of you, information is at your finger tips.

Investment requires some degree of skill. Very few investments are sure to make profit. There is always the risk of losing money. Higher the risk you are willing to take - higher could be the profit.

Before you start investing money, it is always a good idea to invest some time and set your investment goals.

What are you hoping to achieve with the investments ?

Planning to buy a home ?

Thinking about Retirement ?

Are you planning to fund a college education ?

Before investing any money, it will be worth spending some time in setting the goals. Understanding the goal will help you make the right moves in the right direction while investing.

When many think about investment - They want to become millionaires overnight. This is very rare and do suspect the person who tries to sell you information of becoming rich overnight. There are lots of con going around. They are targeting at vulnerable public who wants to make money quickly. Do enough research on the internet about the offers you might get. Someone somewhere might have gone through similar situations before.

So when you start investing, don’t try to be very rich too quick. Do Learn the systems and explore various options.

You may want to speak to a financial planner if you are thinking about investments. Your financial planner will be a qualified person who has done enough research and will help you to plan and set your goals. The financial planner may even be able to provide you advise on making the right investments at the right time.

He or she will be able to provide you with an estimate duration for the investment to attain your goal.

Always remember that investment just doesn’t mean calling a broker and buying and selling stocks / bonds. It will need lots of homework and research and also advices from reliable sources.

Invest some your time before investing money and convert money to wealth !!!

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