There are a lot of technical advices out there telling different investment strategies to grow your money. If you are a first-time investor, then you have to start from scratch. You need to understand basic and simple concepts in investing.

The first step in investing is to understand how the different types of investments relate to each other. Then you can do an asset allocation in each of these types to determine which amounts of your total portfolio to invest in each of these categories.

For the first-time investor, here are some simple investment strategies that you should learn:

Keep some cash. Everyone needs a cash reserve to meet life’s various emergencies. Investment cash isn’t just the currency and coins in your pocket, but money that can be changed into that quickly.

You can keep you cash in checking and savings accounts, money market accounts, and short-term certificates of deposit and treasury bills. The key is to make sure you can cash it within 90 days without forfeiting principal.

Loan your money. Bonds are simply loans to governments and corporations. When you buy a bond, you get an IOU with a fixed interest rate and a promise to return your principal at the end of a certain time period, sometimes 20 years or longer. Interest is paid on a set schedule, so you know exactly when and how much income you’ll get.

Alternatively, you can also loan your money to your friends or relatives as a way to fund their business or in cases of certain emergencies where they can use it an emergency fund. Just remember to loan your money to trusted people whom you can expect payment and write a legal agreement such as promissory notes especially if it involves a large amount.

Own a piece of the company. With stocks, you have a chance to make more money, but there’s more of a risk you’ll lose it. Stockholders are actual owners of a company - each share of stock is a piece of equity. When a company makes money, it divides up the profits, and pays each owner a dividend. However, stockholders never know how much they’re going to get.

You can make good money by selling a stock whose price is going up but you can also lose a lot if it goes down. However, be alert on some “bubble” situations, which begin when the price of a particular stocks or group of stocks rises rapidly. Investors drive up the price as they rush to get on the bandwagon. Eventually, though, the bubble bursts. Those left holding the bag are big losers when the stock drops back to its true value. This happened on The Great Depression that caused a lot of poverty in the US and in most countries during the late 1920 to early 1930s.

Invest in your home. If you’re a homeowner, you’re a real estate investor. For many people, their home is the biggest part of their investment portfolio. Alternatively, you can invest in real estate through real estate mutual funds and real estate investment trusts.

Make your investment plan. Map out your investment plan. Once you understand these categories, decide how much you want to invest in each one. You can balance your risk by putting some money into safer places, especially if you’re investing in something volatile like the stock market.

Put a certain amount in the stock market, and then temper your risk with investments in other investment categories.

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