Ally Wealth No Comments

Investment For Beginners | The Basics of Investment and Wealth Management

Most people with disposable incomes will fail to invest it, not for lack of initiative, but for the lack of information on how to get started. The term ‘investment’ is taken by many to mean a series of events that is hard to master or follow. Lets’s learn the basic and  important types of  investment for beginners

What Is Investment?

But is that really the case? Is investment that hardest thing to understand? Not really, when you have the information we are about to share.

Investing is committing money towards a particular economic endeavor with the intention of gaining profit or income from the same. It is not a get-rich-scheme, and so in most cases, money committed will be tied in that endeavor for a reasonable period of time.

Income from Investing: 

The return that you get from investing can be in terms of interest, profit, or dividends, depending on the type of investment you have made.

Most forms of investment take a long-term approach. With a longer period, the risk is reduced and so is the potential earnings. There are few investment opportunities that are short-lived, which require massive amounts of capital. Their returns are quite handsome, but the risk is equally high.

Let’s know 4 Ways to Improve Your Investment Returns even investing with little money.

Types of Investment For Beginners

types of investment - investment for beginners

There are several types of investments for beginners and others, which are all geared towards giving you return on your capital.

  • Stocks

They are undoubtedly the most popular types of investment for improver. Before we define ‘stock,’ we could demystify a shareholder. A shareholder is a someone who owns some stake in a company. That stake gives him the right to say that he owns the company to a certain percentage. There are mainly two types of stocks  The stake is also known as stock.

Ownership of a company is determined the number of shares a person owns. If for example, you, the shareholder owns 100 shares in a company whose total issued shares of stock are 1,000, then you own 10% of the company’s assets. If the company were to liquidate, you would claim 10% of their assets.

Shares are classified into two, preference, and common shares. Preferences shareholders receive pre-determined amounts in interest every year, while ordinary stock shareholders receive dividends based on the company’s performance.

You can invest in various company’s shares to diversify your portfolio. There is a significant difference between trading in shares and investing in a company. Traders are speculators who sell their shares

once the price has risen, only to buy them back after the price goes down. Investors leave their money to accumulate dividends for them, and most of them use it as a wealth-accumulating source.

  • Bonds

They are basic IOU’s where a borrower (could be a corporate or the government) issues you an acknowledgment that they owe you, and that they intend to pay you the face value of that bond upon maturity. Your return for lending them the money, they will give you a fixed interest per month. This another good type of  smart investments for beginners

They are ideal because they are risk-free or with very low risk. You are also assured of a fixed income per month. Some bonds, especially those issued by the government, are tax-free. Upon maturity, which varies from bond to bond, the entity will return the face value of the bond as was the agreement.

Check the bonds service of Ally Wealth Management

  • Mutual Funds

A mutual fund means a pool of resources from a group of people whose aim is to invest in a diversified portfolio, but not individually. The investors will want to invest in money markets, shares, bonds and a variety of profitable investments, and so they pool resources together to have better bargaining power. These monies are managed by money managers who invest it safely and wisely to make good returns for the investors.

Check the Mutual Funds service of Ally Wealth Management

  • REITS

Real Estate Investment Trusts work like mutual funds in a way. Real estate is a costly investment ad not everyone who would want to be in it can afford. Therefore, REITS exist to enable more people to get into real estate investment through pooling their resources together and co-owning property. They then get an agreement return at the end of each fiscal period. The returns are of course from the income generated by the real estate.

  • Dividends

This is the primary return from investing in shares. Every year, a publicly listed company will make their financial results for that year public, and then proceed to announce their dividend per share. All common stock shareholders get their dividends, which will be a percentage of the company’s net profit after taxation. This is also a good type of investments for beginners

Capital Gains

A capital gain is made when capital asset gains value. Capital assets include shares and real estate. Capital gains are not realized until the capital asset is sold.

Conclusion

Learning about investments makes you more knowledgeable about the allocation of money that will undoubtedly have an effect on your future. Start learning today about investments for beginners from this article and build your knowledge on wealth management.

 

 

Ally Wealth No Comments

What Does an Investment (Financial) Advisor Do

If you try to look up the word advisor, you won’t find it in the dictionary. Instead you will see the word spelled, adviser. Both spellings are correct, and, according to the Oxford Dictionary, they carry the same meaning, with one small variance. Adviser is used for more common practices, where advisor is seen as a more professional role. Read more

Ally Wealth No Comments

Five Rules for the Beneficiary of an IRA

Whenever we here the letters “IRA” we get a picture in our mind of an investment that has some kind of tax benefits and consequences to it. We know that the money that’s made inside an IRA is not taxed until it is removed. We know that when we put money into an IRA we get to deduct it from our income tax. Most people know that at 70 ½ (or the year following), we have to start taking money out of the IRA and pay ordinary income tax on that amount. But that is about the extent of people’s knowledge of what an IRA is and what it does.

But when it comes to inheriting an IRA, most people are completely in the dark. Not knowing how to set up and transfer an IRA upon the death of the original owner can cause an irrevocable tax nightmare. Let’s start with the first person in line.
Read more

Ally Wealth 1 Comment

Hidden Fees May Be Lurking in Your Company Retirement Plan

Anyway you figure it, Steve Jeffers is a formidable investor. For 18 years now, the Belpre, Ohio, plant manager has been diligently stashing money in the 401(k) plan of his employer, Kraton Polymers. Thanks in part to a generous match by Kraton, the 43-year-old Jeffers has amassed almost $400,000.

Yet Jeffers didn’t have a clue what his 401(k) investments were costing him — (and neither, I wager, do you). A recent AARP study found that more than 80% of 401(k) plan participants were unaware of how much they were paying in fees associated with their company’s retirement savings plan. And what you don’t know, you can’t change.

Mutual fund returns in 401(k) plans are normally reported as net returns, meaning that fees for managing your investments are subtracted from your gains or added to your losses before calculating the annual return. Other costs, such as administrative and record-keeping fees, are often divvied up among plan participants but are not explicitly listed on individual investment statements.

Read more