Pam Etuglavu's Financial Advice

Smart investing: some basic tips

Investing is an ongoing project, and the sooner one starts, the better off they will be. Even before they finish high school, potential investors should think about the future and be prepared not to see returns for years. A smart investor will research all their options, and steer clear of investment opportunities that come with high fees and taxes.

If you are young, retirement may seem like it's a long way off, but that is actually the perfect time to start saving. Start your investment career by researching stocks, which are the riskiest investment but offer a greater long-term yield. The stock market rarely stays down for years on end, so even if money is lost one year it can easily be regained the next.

If your chosen stock does not recover with the market, the investment can be permanently lost, making diversification very important. An easy way to diversify is through the mutual fund. The concept of a mutual fund is to give a certain amount to any investor who is willing to spread their capital among several different stocks. The mutual fund manager researches the stocks in the portfolio, choosing the best and most reliable so you don't have to.

If you do decide to invest in mutual funds, beware of fees that can cut into your bottom line over time. To avoid these fees, choose a fund that only invests in top-earning corporations. A managed fund requires a bit of research by the investor, and funds that invest in top stocks will almost always perform better.