How to make smart decisions about investing

If you have money to invest then it is equally important that you make some smart decisions before you invest.Investing is a set of strategic moves that will help you increase your money if you do it smartly.Simply investing on a whim or not doing your homework is just a waste of time, effort and most importantly your money.Here is what you need to know about how to make smart decisions about investing-

• Understand that you will not get rich overnight.Real investing has a time factor to it.You must be able to invest your money and then sit back and let it grow for you.If you are unable or unwilling to do this investing is not for you.Equally important is the understanding that you should never invest money that you will need in the next five years.If you are looking to buy a house, fund an education or make another significant purchase in the next few years that money should not be used to invest.
• Have a clear understanding of what you are investing in before you invest.You need to do your homework before any money changes hands.You can ask questions; look for information online, in books and on T.V.Once you have gained a basic knowledge of investing then move on to studying the specific investing options.You should read all of the literature that accompanies the investment opportunity.Then and only then if you understand what the investment is then you can proceed.Do not be intimidated into investing in something that you do not understand.
• Never let anyone (financial expert or not) tell you what to do with your money. You should never let anyone talk you into something you do not want just because you think they are the investment expert and they should know. Keep in mind that financial experts are not always right.And just because everyone else is doing something does not make the right investment for you. If you have done the right research then are armed with the information you need to have to make the right choices for your money.
• Remember that nothing is free!Reputable financial experts advise that when it comes to investing your money, if you hear the words "won't cost you a thing," or "no risk involved," then you should run in the other direction. The bottom line is that if you are going to make money you have to spend money.
• Do not just go with the popular choice.Most people tend to begin their investing careers with a mutual fund.This is fine but there are certain things you should know before making a decision on one. You should make sure you understand the "expense ratio" of a mutual fund. This is what it will cost you to have this mutual fund. There can be some hidden fees, which might cost you something each year. You should look for low expense ratios of 1.25% or less.You should also keep in mind that mutual fund investing works best for the long-term investor. If you only want to "try" mutual funds for a short period of time, then you will want to stay away from mutual funds that have "contingent deferred sales charges." Just make sure you understand all charges that you will be responsible for if you sell your shares.You should also be careful of "when" you buy your mutual funds. You never want to buy mutual funds just before they are going to make a dividend or capital-gain distribution. This is because you will be paying taxes on money that was made before you even invested in it.