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Frugal Investing by Nikki Willhite What is frugal investing? In my mind, it is cautious investing. Most of us are working hard to either stay out of debt, or get out of debt. One of our goals, after we get out of debt, should be to put some money aside, for a multitude of reasons. When we save money, we want it to grow. Some of us are lucky to have our money invested by professionals through work investment plans. Others of us are on our own. It can be hard to decide what to do with our hard earned, and carefully saved money. The Stock Market has historically given the highest rate of return. Lately, it has taken money and in some cases, reduced it to rubble. Most savings accounts pay little interest. Money markets or certificate of deposits are not making a lot of interest either. So, where do you put your money? While the answer to this question depends  whom you ask, but there are some good guidelines for solid, safe investing. Here are some basics to keep in mind - There is nothing that brings more peace of mind to a family than to own their home. If you want to make extra principle payments on your mortgage, you are can consider yourself achieving a rate of return on your money equivalent to the interest rate of your mortgage. - If you want to invest in the stock market, buy mutual funds instead of individual stocks. Better yet, buy a broad based fund that covers a whole index. If you have your money in one sector, for example, biotech, you risk losing your money if that sector takes a downturn. Diversification is your biggest safeguard. - Keep some money in more secure investments, like treasury bills, bonds, money markets and CDs. - Don't try and out guess the market. You won't win. Don't wait to save until stocks are climbing or interest rates rise. Make saving a habit. No matter where you put it, put some money aside each month. - Be aware that when you buy mutual funds, there are different fees involved, depending on the fund. Do your research before investing. - You can find detailed information on the Internet about each mutual fund, their top holdings, their performance and their fees. One of the best places to start is Yahoo. Here is the URL: http://finance.yahoo.com/ - Keep your age in mind when deciding where to put your money. The older you are, the more secure your investments should be. If you are in your 20's, you can ride out a downturn in the stock market, and are fairly safe putting your money there. If you are about to retire, you can't take the risk, and your money should be in a more conservative investment. - Put your money away and don't touch it. It won't compound and grow if you do. Make sure you have an emergency fund for the unexpected. - Finally, set a goal for your long-term investments, to help motivate you to save. You are more motivated to save money if you know what you are saving for, such as buying a house, your children's education, or your retirement.   About the Author: Nikki Willhite, mother of 3 and an interior design graduate, has been writing and publishing articles on the topic of frugal living for over a decade. Visit her at www.frugalhappyfamilies.com - where you will find hundreds of frugal living tips and articles. Frugal Happy Families- more than just money!  Article first published at www.allthingsfrugal.com

 

 

 

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