Learn to Invest Money

It's important to learn to invest money if you think you don't have nearly enough. If you're willing to read a few books on investing or take some classes at a community center about the process, you'll have an easier time understanding the process and finding the path best for you.

Start at Work

Many companies offer employees the opportunity to participate in a 401K program, and that's one of the easiest ways to learn about investing. Surprisingly, many people choose not to participate in the 401K plan at work for a number of reasons, including:

  1. They don't want any more money taken from their paychecks.
  2. They want that money accessible.
  3. They don't understand how the program works.
  4. They're not sure if they'll be with the company for a long time, and think it's not worth the trouble.
investing early makes sense

Here are some things to consider.

  1. You won't miss the money. 401K contributions deducted from your paycheck are taken out as pre-tax dollars from your gross income. While you might see a slight reduction in your take-home pay, you're earning more money in your 401K savings than what you contribute because of the possible earned interest.
  2. You're saving for your future. Investing money in a 401K means that you have to think 10, 20, 30 years down the road for retirement. If you withdraw money from your 401K before retirement age, you'll pay stiff tax penalties. Change your mindset about this pool of money. It's still yours, it's just not yours right now.
  3. Professionals are ready to help. At your company, experts within your human resources department can explain the basic principles of your 401K plan. Most are eager to help you understand the process. While they can't advise you on how to invest, the company that operates the fund can.
  4. Start now, roll over later. Even though you start your 401K plan with one company, you can easily roll it over into another 401K plan with a different company. That money follows you through your employment.

Another excellent reason to participate in the company's 401K plan is most companies match a portion of your contribution. While it may not seem like a lot on paper at first, in time, it really adds up. The average company matches between two and five percent of your 401K contribution. That's twice as good of a return as the average savings account at a bank, and in addition to the compounded interest your investment is earning on its own. Think of your company's match as free money!

Take Classes to Learn to Invest Money

If you'd like more one-on-one direction to learn to invest money, many community education programs and financial institutions host classes on the subject.

Community education programs are classes taught by experts in the field and open to the public. There are no special requirements to attend, but there is a nominal fee and sometimes the cost of a manual. The course runs for six-to-eight weeks, typically one evening a week for a couple of hours at an activities center, senior center, the library, or an adjunct classroom. Here is an example of a course description for an introductory investment class offered by the Des Moines Public Schools in 2010:

ABCs of Investing 2 Wks $25

"Want to learn about investing? This class will provide an in-depth look at the many different types of investments available to and suitable for individual investors who are working or retired. Discuss basic investment and portfolio building techniques, with emphasis on stocks, bonds, mutual funds and annuities. No promotion of specific products or companies. Instr: Pearson"

Keep in mind that while most community ed programs are operated by the local school system, any expert can offer to teach a course. You shouldn't let a course like this be your only source of information; rather, it should one step of many toward understanding how to invest.

Many financial institutions such as banks, credit unions, and investment companies hold classes periodically on how to invest. Of course, these organizations are hoping you'll buy the products they recommend after the class is over, but you shouldn't have to do that in order to take the class. There may be a slight attendance fee to pay, but most will host the events for free with the hopes of getting bigger business from you down the road.

Don't Be Lured Into Buying a Product

If you see an ad for a special course on how to invest, do your research and make sure the course isn't just a way to get people to buy into a certain plan or company. You should be able to get quality information during the session without being required to make a purchase, but you'll have to talk with the organizers beforehand to determine what information will be provided and the expectations of the course.

Books That May Help

There are a number of informative books for the first-time investor you may find interesting, and we list just a few below. You may not find all of them at your library, but consider purchasing them a small price to pay to increase your financial knowledge and learn to invest money wisely.

Also review the LoveToKnow Save slideshow, Personal Finance Books, as well our Expert Interviews category for in-depth answers from finance professionals.

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