Who wouldn’t love to know exactly what to invest in now? The fact is it’s still a very strange market, and it’s impossible to determine what to invest in based on recent past history. One thing for sure if you don’t want to think only like a long-term investor at this point. The returns may or may not be there. And, the volatility still could come back.
Depending on who you talk to, this market could either continue to go up the way it has since early 2018, or it could take another nosedive, as it did after the great depression in 1937. How is the average investor supposed to know where to invest their money in 2019?
The most important thing to remember is that you must now be an educated investor if you expect to make money. The days of parking your money in a buy and hold strategy, and watching everything go up over the years, is long gone. If you aren’t willing to do the work and learn to invest money, you’re just going to lose your shirt. Bottom line, there are people making money in the market every day, but they know what they’re doing and they have the time to watch their investments and pay attention to where the smart money is right now.
Even so, there are some simple rules of thumb to decide where to put your money. First, you want to avoid handing your money to a broker and telling them to take care of you. The reasons for this are easy. First of all, the returns you will make on any investment today may not be enough to cover your brokerage fees. When you calculate broker fees and also the fees to trade, you could wind up in the hole even if your investments make some money. If you must use a broker, make sure you force them to outline all of the fees and charges involved in using their services.
Remember too that the broker does not have to have your fiduciary interest at heart. One of the pieces of legislation before Congress right now would include language to force a broker to have the same interests as a lawyer does that represents you. Right now, a broker has no obligation to do the right thing by his or her clients. The fact that so many investors thought otherwise is a direct cause of how so many people lost money.
You must use a self-directed account. You can set up a self-directed brokerage account, a self-directed IRA account, and other accounts where you decide to best invest your money. This is important since there are many opportunities now to invest that cost very little in the way of fees. If you have the education and know where to put your money, you can really save a lot by making your own decisions. Since the truth is that even if you use a broker you should know how to invest, why give away your fees to a broker when you can save that money by placing the orders yourself using a self-directed account.
You also should select among the different discount brokers that are available. There are many discount brokers who would love your business, but the fees are still all over the place. A discount broker could be charging $15 per trade at one firm while another broker likes TradeKing which charges just $4.95 per trade. So what else do you want to look for when you’re looking for brokerage accounts?
Clearly, if you’re learning to invest money, you want to look for educational resources provided by the broker. Most brokers offer plenty of charts and other real-time data to their customers. But not all brokers offer things like discussion groups, options trading lessons, and other information that will help you learn all the many ways to make money in this difficult environment. Make sure you can get a tour of the broker interface and the resources available so that you can find out whether you’re going to have many more opportunities to learn about making money in the markets. Consider also using a broker that doesn’t spend a fortune advertising their company on television. You know the companies; these are the ones that run non-stop advertising on stations like CNBC. The reason they’re going to charge you more money per trade is that they’re financing their advertising. How does that benefit you? The fact is it doesn’t. There are plenty of companies that don’t advertise and pass the savings on to you in the form of lower per trade fees.
If you’re going to figure out how to make money in today’s market, you will have to learn how to invest in different types of vehicles besides mutual funds. Today you have many options like ETFs, options, bonds, Treasuries, and so on. Mutual funds are not the best investment vehicle, especially in this type of market. The reason is that mutual funds come with fees of their own, as well as investment minimums. Even where a broker says you can invest in mutual funds without a fee, they are not referring to the fees the mutual fund itself charges, but rather only their fee for you to purchase the fund. Be sure you understand the difference between all of these types of fees and factor in all of the costs before you invest in any particular vehicle.
This is why if you are looking for where to invest your money now, you need to do some legwork and education effort before investing your money in something that may be new to you, but which does offer returns in a market such as this. Arm yourself with education, and a good low fee discount brokerage account at a company like TradeKing, and you will be ready to invest your money today in vehicles that will make you money for decades to come.