- Protect and grow your money.money, money, money image by easaab from Fotolia.com
It is never too early to get started with a comprehensive and consistent strategy of saving and investing. Living below your means and putting money aside for the future is the best way to build wealth over time. Getting off to the right start can help you build your money that much faster. - One of the most important things for the beginning investor to do is establish an emergency fund. Having an emergency fund with at least three to six months' worth of living expenses protects you and gives you options if you lose your job or suffer a financial shock. A money market fund is the perfect vehicle for an emergency fund, since it provides instant access to your cash while giving you a good rate of return while the money is invested. You can even set up your direct deposit to put part of your paycheck right into the account.
- Index mutual funds simply purchase all of the stocks in a given index, such as the Standard and Poor's 500 or the total stock market index. According to Money Magazine, this approach has historically outperformed the vast majority of managed mutual funds, which constantly try to beat the market by buying and selling stocks. Index funds are also among the least expensive stock market investments, making them a good choice for beginners and others who are worried about expenses.
- Asset allocation is an important part of investing, but it can be difficult for beginning investors to get the mix of stocks, bonds and fixed income securities right. Target date retirement funds try to take some of the guesswork out of investing by automatically adjusting the percentages of each asset class as retirement nears. With a target date retirement fund, you simply choose the fund that corresponds to the year you plan to retire, i.e. target date 2020 or 2030.
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