How to invest one thousand dollars wisely (Part 1 of 3)

Perhaps the most reasonable and reliable tips a novice investor can receive is to simply have moderate expectations when it comes to returns and be content with a market that does not display wild bouts of volatility. Those investors who have considerable money to burn and the willingness to weather the uncertainties and sharp fluctuations can flock to the riskier assets in order to get their fix in both gambling and potential riches. Yet if $1,000 is a great portion of the money you and your family have to play with on the market, it is best to play like the patient and prevailing tortoise and not the sporadic rabbit. Subtlety and a firm grip of reality are key for any investor and are especially vital for a novice one. Pipedreams of grand returns in short time spans were a major factor in driving so many expecting traders into web of Bernie Madoff, and it was also the reason why so many ill-fated investments were placed into the sub-prime mortgage market. Therefore, the following three-part article is a “broad strokes,” simple and most importantly, safe guide of how to invest on a moderate budget that can get you started on your portfolio.

Mutual Funds are an easy and time-tested example of what a new investor can sink his/her teeth into without putting the capital at tremendous amounts of risk. Mutual funds are designed specifically for a consumer, thereby making them an idyllic investment. What mutual funds essentially do is collect the funds of many investors in order to purchase a diversified portfolio of equities, bonds and other money market branches. The vast majority of mutual funds are a very low risk venture, yielding a pathway for small investments to generate a profitable rate of return. An investor’s savings can go a long way if placed into mutual funds, provided said investor is equipped with patience. Mutual funds garner much better return rates than a garden variety savings account, and present drastically low collapse risks.

The fact that mutual funds represent the collective investments of several people also ensures a portfolio that is diversified to a level that an individual investor would have a difficult and long time assembling. Choosing the appropriate mutual fund can be a difficult decision; however, the majority of them present the investor with a thorough history of past performance and future projections. An apt comparison to making an investment into a mutual fund would be locking your money in a safety deposit box. It may not be the most economical way to store your finances, yet you also run the most minimal risk possible that the box will be broken into. If you are an investor looking to place money into a long term operation that is safe and can generate ample profit, mutual funds could be a great path for you to take.