a maturity date of 10 to 30 years.
Money market accounts are another great investing tool for those who have more money to put down. These accounts allow you to pool your money with the money of other investors. Visit www.bankrate.com and compare money market and savings account rates at the financial institutions in your area. Vanguard requires a $3,000 minimum and offers free check writing, no sales charges, and convenient access to your money. MMAs usually pay higher interest because they incur more risk and aren’t FDIC insured. Interest is usually compounded daily and paid out monthly.
Mutual funds allow you to be diversified and invest in a collection of companies that will fit that risk perimeter but will not put all your eggs in one basket. Log on to www.fidelity.com and let the fund evaluator calculator choose the fund that best fits your needs. You can compare more than 4,600 Fidelity and non-Fidelity mutual funds according to how much you can afford. Before choosing to invest in a mutual fund, consider the risks, charges, expenses, and re-evaluate your investing objective.
Clear up any debt. Make sure that you are debt-free. Investing is the last step after you have established all the other pieces of your foundation for financial freedom.
Choosing a brokerage firm. Sharebuilder, E*Trade and TD Ameritrade are good investment tools for the beginning investor with little cash. Sharebuilder offers no inactivity fees and has no account minimums. New and less frequent investors can pay as little as $4 for each investment. E*Trade also offers a high yield savings account and CDs. A six-month fixed rate CD currently yields 3.30%.
Once you get your savings built up check out Vanguard, Charles Schwab or Merrill Lynch. Charles Schwab requires a $1,000 minimum and offers no account service fees, all-in-one portfolio and lets you trade stocks, bonds, mutual funds, and other investments. You can also add on a checking account that has no ATM fees or minimum balance requirement, and is FDIC insured up to $100,000. They also offer free standard checks, free bill pay, and a Visa Platinum Check Card.
If you’re not ready to take on the inherent risk that comes with investing get some experience first. Play some online games such as CNBC Portfolio Challenge, Investopedia and visit the Motley Fool Website at www.fools.com
However you decide to invest, start as early as possible. “Remember, the road to millions of dollars for people like Bill Gates, Yahoo, and Google, got started while they were in college,” says Ridley-Dorsey.