Yes, the "I" word, we've all heard about it as we pass by CNBC to watch the latest episode of "Deal or No Deal", but most of us just don't take the time to worry about it. We know we aren't saving enough money for retirement for our kid's college, but that's a long time off so we don't worry about it. Some of us say that we just cannot afford to make investments right now because the money is not there. However, the truth is that you cannot afford to not make investments for the future. Retirement will come, the kids will go to college, and these things cost money! If you decide to turn things around and begin investing, here's how you can evaluate investments and make sure what you're buying into is something worth having.
If you're a new investor, chances are you going to visit a broker because you some understanding in the types of investments and the types of tax deferred accounts that you can get. It's okay to do this, but listen with a filter. Ask your self why is this person trying to get me to invest in this certain company, mutual fund or annuity. Is the person going to make a higher commission because you buy into that product as opposed to another one? Does this person own any shares in that investment?
In order to not get had, you have to have a basic understanding of different types of investments are out there, about how well they compare to other investments, and what type of tax deferred accounts are available. Unfortunately, this is going to take some work. It's a lot easier just to put your trust in someone else, but this is the best way to lose all of your money and fast. Only invest in something when you understand it and believe it will make money.
Perhaps the single best way to measure how well an investment will do is to look at how well it has done in the past. If a mutual fund which is managed by a team of managers makes 15% a year for the last fifty years, chances are they're going to continue to do that for a long period of time. Don't invest in something merely because it has the potential to make money yet has not shown the ability to yet. There are a lot of investment scams and schemes which sound really nice but fail to pan out when reality sets in.
Do a lot of reading, listen with a filter, and figure out the track record before making any sort of investment.
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