In return, the investors get equity interest in the company. Which means, public trade companies sell shares to investors as a way to raise capital to expand their business. If you’re not quite sure what they are, don’t worry, you’ve just started managing your personal finances! In a nutshell, equity investments is the buying and selling of stocks of publicly traded companies. Which is just as well because equity investment is great for beginners. Everyone’s mind always goes to stocks when they hear the word “investment”. This is probably what you were looking for when you clicked on this blog. If you’re looking for a low-risk way of managing your personal finances, we definitely recommend fixed-income investments! So, if you’re just starting to think about handling your finances better, this could be your best bet! Equity investments or Stocks Just remember this simple rule and you’ll be fine- when interest rates increase, the price of the bond decreases, and as interest rates decrease, the price of the bond increases. But if you want to further buy or sell your bond before its maturity, then the market fluctuations will affect you. If you’re planning on holding onto the bond till it reaches maturity, you don’t have to worry about your return on investment. This interest is generally paid once or twice a year till the whole amount is paid off i.e. And you get a specific amount of interest back, called the coupon rate, in exchange for this loan. You can actually look at bonds as a loan that you are giving out to the government or a company. Bonds are offered by both companies and governments and is one of the largest markets out there. These bonds allow the investor to get a fixed-rate payment over a specific period of time. A fixed-income investment is generally known as a bond. Go here to learn more!Īs the name might suggest, this is one of the safest investments for beginners out there. Roomi tip: If your employer doesn’t offer a retirement plan (or if you’re self-employed), don’t worry! You can open an IRA account on your own. If you already have one, great! If you don’t, reach out to HR to find out what your options are! So, if you’ve just started managing your personal finances, definitely look into retirement funds. #Handling finances full#Though it is recommended that you contribute at least enough to be able to claim the full employer match. Pay whatever amount you’re comfortable with. What’s more is that there isn’t generally, a minimum amount you need to contribute towards the fund. Especially, if your employer matches a percentage of your contribution towards your fund. For most employees, a retirement account is the first investment they make. Investing through your employer is a great, low-risk way of handling your finances. You probably weren’t expecting 401(k) to show up on this list, but here we are. Related: Financial Planning Basics: The 6 Golden Rules To Save Money The easiest way to start handling your finances: retirement account But by the end of this, you’ll definitely get a better understanding of the different options available to you and how each of these will help you in managing your personal finances! So, let’s start with the most basic one. Maybe you’ve heard some of these before, maybe you haven’t. Which is to say that today we’ll be looking at three basic types of investments that are best suited for beginners handling their finances. So, rather than throwing a bunch of jargon at you, we thought we’d make things a bit easier for you. It will take a while before you can familiarize yourself with the different types of investment options available to you and if they’re a good fit or not. If you’re new to the world of investing, everything probably feels overwhelming right now. Lessons in handling your finances: What are the basic types of investments?
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