How Much Do You Really Know About Investing?

Investing regularly is something everyone should do. However, many people are trying to make investment decisions with limited information. Take this simple quiz to determine how to invest your money more effectively. Just decide whether each statement is true or false.

1. The stock market is a good place to invest funds that you may need a year or two.

2. If you have shares in a mutual fund and the need to sell, you must wait for each individual title to sell before you can get your money.

3. Investing in real estate is always a viable choice.

4. You should always use a traditional brokerage firm to manage the investment activities.

5. A savings account is a good way of investing for retirement.

It may surprise you to know that all these statements are false.

1. The stock market is not the place for short-term investments. You make money by investing in equities, keeping them up at the right time to sell. Rarely is more profitable to "flip" stocks, particularly if you choose safe investments like blue chip securities. Fees and taxes can devour what little profit they could earn. So if you know you are going to need access to your money within the next two years, jumping investment in shares. You will be better with a certificate of deposit account or money market despite low interest rates these accounts paid.

2. Terms vary depending on the surface, but the shares are usually sold back to the mutual fund, instead of being placed on the market. Investing in mutual funds is usually a safe choice, although not normally see huge profits. When you invest in mutual funds, choose those with a proven track record, and the longer the story, the better. Many funds have been in operation for forty or fifty years, then you should be able to get a good idea of ​​how they will perform before investing your money.

3. Investing in real estate can be profitable, but it is not always safe. For example, during 1980, most areas had housing prices that are highly inflated. Coupled with high interest rates, this has had a devastating impact on the market. As always will be, the market corrected itself. Many people have found themselves "upside down" on their mortgages, owing more than the house was worth. Often they were not able to escape the double-digit interest rates to refinance, because they needed to pay significant amounts only to refinance 100% of the value of the house. Investing in a market has prompted many speculators to failure. Before investing in real estate, it is important to understand all aspects of the market that may impact your investment.

4. The traditional brokerage houses, is to pay taxes and traditional. For a beginner interested in investing a few hundred dollars, the online services that involve a small flat rate per transaction are usually better choices. Moreover, those who have experience with investments often can forgo a traditional broker, as they often have no idea that companies that want to own. No matter how you choose to manage your investment, always look for the shares or funds you wish to purchase.

5. Savings accounts are not for retirement, despite having a nest egg can be a nice bonus. Accounts books do not generate much interest, and should not be considered a viable form of investing, especially for retirement. Investing for retirement should take the form of IRA, 401 (k) plans, SEP, or if you are self-employed. Use savings accounts for easy access to funds in case of emergency, or to accumulate funds for a major purchase.

The more you know to invest, the greater your rewards will be. Never assume that a person knows everything, because things can change rapidly throughout the world to invest. And never stop learning to invest: it's your money, and you need to be involved in your financial future ....