Screaming Jesus’ advice is very good. You should always remember the golden rule of investment: [quote]
[color=darkblue]Don’t put all your eggs in one basket. [/color]
This doesn’t mean you should invest in eggs or chickens or baskets. It means you should invest in a range of different investments.
The safest investment is putting cash in the bank. The risk is virtually zero, but often the return is not much more. That said you should always have at least a few thousand dollars sitting in the bank in case of emergencies. After that few thousand you can then consider other investments. Fixed interest or term deposits are OK. It offers fairly low returns, but almost no risk. If you are conservative and worried about losing your money keep a large proportion of it in this category.
Nobody has mentioned real estate. It is generally fairly safe, but you need a lot of initial capital and/or a good reliable income stream to get into it. It is definitely a long term investment, too.
Shares are very easy to get started in as you can start with as little as $1,000. If you invest in good reliable companies that pay good dividends and are prepared to keep your money in for at least five years then shares are good. Just remember the price of shares goes up and down every day. If you buy some shares and they go down 10% after a few weeks you don’t necessarily need to worry. Remember you are investing for the long term.
It is important to get advice from a broker. Just because Company X is a big company that has been around for a long time and you always buy its products doesn’t necessarily mean it is a good investment. You need to know about the company’s debt level, management and ability to pay a dividend. Good brokers have access to forecasts and research. Their advice is not foolproof, but better than what you would do on your own.
Also don’t invest all your money at the same time. If you buy when the market is at a peak then It may take years just to recover your initial investment again. If you make investments regularly then you average out the peaks in the market. Sometimes you buy high, sometimes you buy low. If you invest in shares it is a good idea to read the business pages so you are aware of any major changes in the companies you have invested in and the general direction of the market.
I have been investing in shares in Australia for about ten years now. I have bought one or two bad stocks, but overall I have done much better than I would have if I’d left my money in the bank (where I may have also been tempted to spend it). Now that I have a fairly decent sum of money I hope to invest in real estate in the next few years. The main reason for this is that you can’t live in shares If I buy a nice property I can rent it out and then some time in the future I can live in it if I need to.
I wouldn’t invest in foreign currency or gold. These carry a high level of risk and require expertise and constant management. Other investments I have mentioned don’t require the same level of attention.