First and foremost, congratulations! Investing your own money is probably the safest way to develop lasting wealth over the long term. If you're new to the investing game, here's a helpful guide to getting you started.
Before you ever put your hard earned cash into an Investment vehicle, it is time for you to earn at least some initial knowledge of how it actually works. The most common investment vehicles are stock markets, bonds, real estate property, rental housing, and the like. These provide initial wealth but also carry the risk of loss. To ensure that you will be able to protect your investments, a financial portfolio is a smart choice.
Dividends are one of the easiest ways to invest. By paying out a regular dividend every year, you gain tax advantages and reduce your taxable income. A stock exchange provides you with an opportunity to buy and sell dividends, so if you choose to use this method of earning extra cash, make sure you understand the terms and risks of trading on stock exchanges. You may wish to consider mutual funds, as they often offer lower commissions and less red tape. And, with the right investor, you can build up a portfolio that offers high dividends along with the security of a steady growth in your portfolio.
Real estate property can be a good choice for initial growth, as well. Though you have to pay taxes on any capital gains, this is a much faster-growing avenue of gaining financially. Once you've invested your savings in a rental unit, however, there is no guarantee that you'll always be able to find a good location. As such, it is important to remember that you will need to put some money upfront in order to purchase real estate, in order to avoid paying capital gains on that investment.
The best choice for the beginner is likely to be in the form of equities, although there are different types of equities, such as blue chip stocks, bonds, mutual funds, or other investment vehicles. When investing in equities, it is a good idea to stick to one asset class, unless you have experience investing in and managing a number of different types of assets. It is a good idea to think about your risk tolerance before deciding on which asset classes to invest in. In particular, the bond market can be very unpredictable and so potentially risky, for those without a great deal of risk tolerance.
Finally, you should also consider the cost of your investment. Cost of ownership is directly related to your level of risk tolerance. For instance, if you are more risk tolerant, you may want to consider Treasury Bonds. If you have a low tolerance, on the other hand, purchasing Power Of Attorney Offices (POEA) or municipal securities (such as bonds from your local city government) would be a better choice. Once you know what your preferred long-term investment style is, it is best to stick with this style for the time being, until you have some experience investing in real estate and/or in other asset classes. Only then should you consider changing to another type of asset class.