Investing 101 – useful guide to get started

Starting in investing world can be sometimes little overwhelming. Investopedia guys have hosted an excellent tutorial for the beginners. Here is the brief summary. Please click here to read the complete tutorial.

Have you ever wondered how the rich got their wealth and then kept it growing? Do you dream of retiring early (or of being able to retire at all)? Do you know that you should invest, but don’t know where to start?

If you answered “yes” to any of the above questions, you’ve come to the right place. In this tutorial we will cover the practice of investing from the ground up. The world of finance can be extremely intimidating, but we firmly believe that the stock market and greater financial world won’t seem so complicated once you learn some of the lingo and major concepts.We should emphasize, however, that investing isn’t a get-rich-quick scheme. Taking control of your personal finances will take work, and, yes, there will be a learning curve. But the rewards will far outweigh the required effort. Contrary to popular belief, you don’t have to allow banks, bosses or investment professionals to push your money in directions that you don’t understand. After all, no one is in a better position than you are to know what is best for you and your money.

Regardless of your personality type, lifestyle or interests, this tutorial will help you to understand what investing is, what it means and how time earns money through compounding. But it doesn’t stop there. This tutorial will also teach you about the building blocks of the investing world and the markets, give you some insight into techniques and strategies and help you think about which investing strategies suit you best. So do yourself a lifelong favor and keep reading.

Is this a good time to invest money?

The biggest fear for most investors is that they might lose or incur heavy losses on the money they are putting in. And when the economy is down it becomes hard to believe that it is better time to pump up your money into stock market. Stock market has this unique characteristic of correcting itself when it feels that most of stocks are being sold much much more than they are worth. How it does that i don’t know. But looking at the history i can say that it does correct itself from time to time when the market madness is going out of hand.

If you are a person with rational long term approach, make sure that you don’t miss the opportunity to acquire stocks when they are reasonably priced.

Here is a little excerpt from fool.com

“What makes the Hottentot so hot? What puts the ‘ape’ in apricot? What have they got that I ain’t got?” — The Cowardly Lion in The Wizard of Oz

These are scary times for investors. But these are also the times that separate the brave from the fearful, the heroes from the hysterics, the men from the boys … you get the picture.

It’s far too easy to succumb to crises of confidence and simply hide one’s head in the metaphorical sand (or worse, sell quality stocks because of fear — after all, it may look like a logical time to cut one’s losses). It’s also hard to work up the courage to buy beaten-down stocks when investing may feel like an accident waiting to happen.

That’s why we can’t forget that these bearish, volatile times create golden opportunities to build stellar portfolios.

Time will tell
Rcently cited in a Washington Post article, Morningstar analyst Bill Bergman provided some compelling information about diving in when things look dire. He calculated how much an investor would have made by putting just $1 a year in the S&P 500 index every month since 1950: A total $703 investment would be worth $9,300 today.

Author makes cites some good analysis. I think the punch line here is “volatile times create golden opportunities to build stellar portfolios” I know that panic which goes on all around with stock market being in recession, it is easy to lose sight of our long term goal and go for safe investments like CD, bonds, etc. But if you wisely study the stocks you are interested in you might realize that this might be the time where you are getting best deals in the market. The key for becoming successful investor is that you should wisely study where you are investing your money. Failure comes when you start following the crowd

Richest man in babylon – Recommended book

Richest man in babylon by George S. Clason is the best personal finance book i have read till date. Originally this book was written in 1920′s. It is a classic and must read for everyone. It takes only few hours to finish reading this book and once you are done  it will most certainly have some affect on you (of course in a good way ).

Author narrates stories set in the ancient babylon period. I would say it is set of short stories and all stories emphasize some strong points about personal finance and life  values.  At the date of writing book happens to be #1 seller on amazon in “Money and Values” section.

A MUST MUST READ FOR YOUNG AND OLD. You can buy this book for few dollars in your local bookstore or get it online from amazon.com .

Some Other reviews:

“What can a book written in the 1920s tell modern investors about their finances? A whole lot if it’s George Clason’s delightful set of parables that explain the basics of money. This is a great gift for a graduate or anyone who seems baffled by the world of finance and a wonderful, refreshing read for even the most experienced investor.”
-Los Angeles Times

Online saving banks

FAQ

Why online Banking?

• They provide best available interest rate for your money as compared to traditional rates. For example, ingdirect.com, emigrantDirect.com provide interest rate which is significantly higher than most traditional banks.
• Some of them offer NO MINIMUM and NO FEES accounts.

Will my money be safe?

There are many reputed players offering the online only saving accounts.  Most of them offer FDIC insured accounts. What that means is that even if the bank goes out of business your account is covered upto $100,000 for individual account ($200,000 for joint accounts) by fdic.

Where can i check to make sure that bank i am dealing with is legitimate and is actually FDIC insured?

Please visit  fdic.gov website. It maintains detailed information.

How it works?

To answer the question very briefly, when open a account, you need to have a existing checking account and you connect your online saving accounts with the existing account for transfering money to and fro. Here is one demo from ingdirect.

Is there any specific bank you recommend?

Best place to start is do some googling. Visit individual bank websites and see what they offer. Whichever works best for your situation, go for it!

Personally, i love ingdirect.com and highly recommend it.  In case you would like to get $25 bonus for opening a account drop me a email from contact page and i will shoot you the offer email.  Just to let you know that i also receive the $10 credit if you decide to open the account, nothing else.

Ofcourse, You can always open a account by visiting their website directly if you don’t bother about the promotional offer.

Next Steps?

Find a good online saving bank, open a new account, earn better interest rate and start living Better!

More questions?

Drop me a email or comment and i will try and respond asap. Remember, there are no dumb questions, feel free to ask about any doubts you have about this topic.

Money Management Tools

As many wise people say, if you really want to rack up money, you should know to track each and every penny you transact.

Luckily now you have several options to do so.

First lets take a look at some old school stuff. There are various softwares like Microsoft Money and Quicken [they are now offering online version as well] which you can install on your machine and track your money. Unfortunately, they are not free. There are some open source softwares like gnucash for linux operating systems. I have tried couple of them but didn’t like any of them.

Money management many times seem like boring and tedious task and you don’t want to be stuck with boring tools Do you?

Now lets take a look at FREE AND COOL Tools. Fortunately, there are several of them offering their excellent services – www.buxfer.com, www.mint.com, www.wesabe.com, etc. I  have tried all three of them and feel that buxfer.com is clear winner among this category. It is non-intrusive, clean, takes few seconds to sign up and provides you with tons of options to keep you happy and cool. Highly recommended!

I will be writing a  detailed review of all these tools in future to help readers identify the pros and consof each.

Welcome to “Invest Money, Live Better”

Dear Visitor,

Welcome to “Invest Money, Live Better” blog.

We are planning to put following information here:

1. Basics and importance of investing [or saving] money.
2. We will review the various online brokers and saving banks which might come handy to our users for making a decision from pool of choices as per their need and situation.
3. We will provide information about various free tools available for money management.
4. Various helpful tutorials and latest information regarding what is going on in the financial world.

And much much more. If you have any thoughts or would like to see some other topics, please do drop us a line.

Enjoy!