So, you've saved up some money, and now you're wondering what to do with it. Buying a house currently isn't an option for you, because you're too poor. You could blow it on useless crap, which would be fun. But no, you've decided to be responsible and invest it. Good for you.
The question now is how to invest it? Well, I'll give you a few tips and some inside information. I'm no Warren Buffet, but I do have a degree in finance, and have worked as a performance analyst for an investment manager in the past. So you could say I have some passing knowledge of the subject.
This is going to be a very condensed, summary version. I'll be posting a bit more detailed stuff later on.
Stocks: Only if you have a lot of money to invest. If not, and you really want to try your hand at individual stocks anyway, only invest a small portion of your total savings. Otherwise don't try. People who are much smarter than you have tried, and failed.
Bonds: No. Bond values are only going to go down in the future. I'll explain why in a later post.
Mutual funds: Generally speaking, yes. But only if you pick the correct ones. I'll go into them in more detail in a later post.
Exchange-traded funds (ETFs): Yes, with a caveat similar to mutual funds.
So bottom line? Go for a well-balanced, diversified mix of low-cost mutual funds/ETFs. Stay away from bonds, and only dabble in stocks with a bit of your money (unless you're a wealthy, sophisticated investor).
Stay tuned for more in-depth posts on each asset class.
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