Firstly, are you prepared to take the risk of investing? If not, you might feel happier with the interest you get from a savings account.

Secondly, remember that investment is a long-term plan. If the stock market crashes, you might have to wait some time before you get your money back or make a profit.

Ways to Invest
There are several ways to invest your money. Here are some of the most popular.

Stocks and Shares
By putting your money into shares, you’re giving companies your money to help them run their business. In return, if they are successful and their share price goes up, you will benefit from the rise in value. Equally, if the company’s value falls, you’ll be losing money. Right now, we’re in a very unstable corporate environment and many companies have lost value. Be careful investing unless you have received good advice!

Unit Trust and Investment Trusts
You can see with shares, putting your money into one company can be quite dangerous. To combat this, Trusts do three important things:

First, they put your money into several companies at once. That way, you’re spreading your risk across the fortunes of many companies: some might lose money, but some will rise in value.

Secondly, a Trust contains not just your money, but many other people’s too. You’re joining a whole bunch of people all committing their cash. Together you have more buying power to spread your risk across companies, and this larger pot of cash usually gets the Trust a better deal.

Finally, your funds will be looked after by a Fund Manager. It’s a Fund Manager’s job to spend time looking for the best place for your cash – day in day out – which means you need to know much less about the stock market than if you were investing privately.

Bonds
These are a particularly safe investment; in fact, you know exactly how much you’ll get back before you even buy them. Bonds are a loan from you to somebody else 9usually the government), for a set length of time, usually between three months and five years. But, because there’s no risk, they don’t pay back particularly well.

Property
Buying and selling property can be lucrative, especially since in many areas property prices have risen dramatically. You will need a lot of money to start with, and if the value of your property falls, you stand to lose a serious amount of money.

Other Goods
There’s a market for most things people want – antiques and collectibles, land, fine wine, etc. But you must understand that buying goods as an investment isn’t the same as picking up a bargain and selling it at a profit. Bargains are rare, and usually rely on the seller being stupid. The value in investing is picking goods to buy which grow in value by themselves, because demand for them grows over time.

Getting Help
Don’t jump into investment without getting good advice from someone who knows their stuff. Get help if you need it. The do-it-yourself approach may not be suitable for everyone. If you try it and its not working, or you’re afraid to try it at all, then you should seek professional assistance.

Your first port of call is an Independent Financial Adviser. They are qualified to give you entirely impartial advice about your finances, and recommend a course of action.

Arm yourself with knowledge. Always do your homework. Understanding financial matters and those that could affect you. Understand your current investments and the risks associated with them. Be cautious when evaluating the advice of anyone with a vested interested.

If you are going to invest in stocks, research companies until you understand them. Remember investment does involve some amount of risk, so choose carefully and make sure you have done your research.

Now, assuming that you sorted out your insurance and cash reserves requirements – which are really the basics of financial plan, we can begin the discussion of investing to maximize your return and minimize your risk. And let us say right here that it is best to speak to a licensed financial adviser to help you determine your return and risk requirement.

Where you are in the life cycle, determines where you are best served by your financial adviser. Typically, younger persons can invest more aggressively so that they can grow their funds to meet their needs. But what if you are uncomfortable with risk? Then no matter your age, you will look to more conservative investment options. For those in retirement, years of savings can be wiped out by poor investment decisions or in the case of global meltdown, actions that you have no control of.

That is why, a complete financial plan is important. But prior to getting there, it is important to have an understanding of where you are in your life.

Accumulation Phase
The ages of 25 to 35 are considered the typical accumulation phase. Now some of us are late bloomers and so don’t really start to get serious until the big 4-0. That said, during this phase, it is characterized by the following constraints:

• Early to middle years of working careers
• Net worth is typically small
• Debt is typically large (courtesy of student loans, car loans, etc.)
• Long investment horizon
• Focus on accumulating assets to satisfy immediate needs (deposit for house, children’s education, etc.)

Consolidation Phase
They say that life begins at 40 and so does the consolidation phase. Actually, financial experts consider this phase to actually begin at 45 and are characterized by the following:

• Past the mid point of their working careers
• Have paid off much of their outstanding car and student loan debts
• Mortgage is main debt burden
• Balancing children’s education with retirement planning
• Income typically exceeds expenses
• Investment horizon is still long with 20 to 30 years before retirement

Spending/Gifting Phase
These days, retirement from one career might be the beginning of a whole new career. The traditional view of retirement where by you are simply sitting around and doing nothing is a thing of the past. Nevertheless, there are some characteristics that define retirement:

• Health care expenses are a greater part of income
• Income comes from early investing activities or company/state pension
• Greater concern about capital preservation while balancing exposure to inflation
• Excess assets can be used to assist friends or family

1. Your savings, obligations and age matter – a lot! In other words, you should not invest until you have saved and given yourself a comfortable cushion. In the current environment of rising cost of living and job losses, aim for a minimum of 12 months. If you have high expense obligations, then you cannot afford to risk money that you could lose (remember, that is what an investment is). The older you get, the less risk you can afford to take with your funds, because your potential working years are declining as you near retirement age.

2. Only invest in products and services you understand. How many times have people tried to convince you about a “sure thing”, and told you “here’s a hot tip’? It may very well be, but if the person telling you cannot explain the investment and why it’s such a “hot tip” or a “sure thing”, then those are grounds on which you should doubt it. And, it would be prudent to understand what influences the investment – what external factors are likely to make the investment do well or do badly. No one is expecting you to be an expert, but it’s your money, therefore you should be able to evaluate if what the “expert” says make sense.

3. Be conservative and invest with solid reputable institutions. We are living with the certainty of uncertainty. Safe is better than sorry. Therefore, you need to do your due diligence and resist the temptation to be lured by the promise of unusually high returns, when you may have doubts about the strength or soundness of an institution. Remember, regulated institutions are monitored while regulated institutions are not. And, return of principal is just as, if not more important than return on principal.

4. Know Yourself. Believe it or not, this one of the most critical things about investing -knowing your own risk tolerance. You may get a great tip, understanding what the investment entails, understand that it’s an investment (as opposed to savings), and be comfortable with the institution, but the product may just be too risky for you. On the other hand, remember that not all investments carry the same risk, and some may just be right for you, once you have sufficient savings tucked away.

Stocks and bonds are two great options that allow you to make investments now that will put you in a position to benefit from huge returns later.

Stocks
A stock is ownership of a percentage of shares in publicly traded company. By owning stocks in companies, you have the right to vote on important company matters such as selection of the Board of Directors. Additionally, stocks allow you to receive a portion of the profits distributed by the company.

There are two types of stocks:

• Preferred Stock – with these types of stocks, companies usually distribute a percentage of dividends each year based on the profits of the company.

• Common Stock – this is usually held by individuals within the public domain. With this type of stock, owners receive dividends based on the remainder of the profits after the preferred stockholders have been paid theirs.

Investing is technically making your money work for you; that is, investing money to make more money. With stocks, as the value of the company increases so will your investment. Stock shares are bought, sold and traded on stock exchanges.

Stocks are usually available through a stockbroker, who will purchase the stock on your behalf, or through mutual funds, which is an investment company that offers and buys shares at the request of the share holder.

Bonds
Bonds are certificates of debt that are issued by the government or a particular corporation, promising payment of the original amount invested at a fixed interest rate, usually by a specific date. They are therefore loans to the government or a corporation, and bond owners are usually paid for providing this loan to the institution. Bonds are one way the government uses to make money.

Bonds are usually bought and sold using institutions such as bond funds, banks, insurance companies or pension funds. Bonds come with a number of advantages that make them attractive to many persons. It is fairly easy to sell bonds and the rate of interest is usually higher than those associated with stocks. Bondholders also enjoy a certain level of legal protection, since it is the law in many countries that if a company goes bankrupt, the bondholder is entitled to receive some of his/her money back.

Ultimately though, both stocks and bonds are risky investments and while they have the potential to produce significant wealth, the investor can also lose a huge amount of his/her investment.

If you decide to invest in either stocks or bonds, it is important for you to seek advice from professional who will be able to advise you about those assets with the greatest possibility for success and those that may be too risky for your pocket. Equip yourself with information to minimize your chances of making bad financial decisions.