The Basics

Anyone who is interested in investing should be aware of the basics of money management and finances.  One of the most important aspects of investing is the risk involved. Most of the time first time investors avoid those investments that are considered too risky. Not until they know the way of the financial world, and the amount of risk their personalities and pocketbooks can tolerate is it advised to attempt anything but the safest investments.

The following is a list of the safest investments in which you can place your money. Don’t expect great returns, but you can expect no loss of capital and steady gains over time.

  • Savings Bonds can be obtained from the US treasury. Low risk but high safety, unless you think the US is about to go bankrupt.
  • Mutual funds are a safe way to invest in the stock market and /or bond market. They are less subject to the ups and downs of Wall Street because the investments are usually highly diversified. Mutual funds are available in a variety of risk levels, depending on the types of companies invested in and the degree to which the investments are diversified.
  • High interest savings accounts are available at your local bank, or can be opened over the internet. Watch out for high fees for making transactions from or to these accounts
    • Money market funds can be long or short term and yield low interest rates in return for the favor of allowing the treasury to use your money. They are quite low risk, but usually yield higher interest than a typical savings account in a bank.