What the Dow Jones Industrial Average means for you

A good tool for managing your investments and making your investment decisions is the Dow Jones index.The Dow Jones will tell you the health of the economy at the particular time by measuring the top trading companies and whether or not they are going up or down.By watching the Dow Jones, you can know if the economy is healthy and whether or not your investments as a whole are doing well because the stock market is doing well, or you can know if the economy is doing poorly and if you need to be more careful in your investments.The Dow Jones indicates how a set number of pre-decided publically traded companies do in the stock market on a particular day.Thus the Dow Jones is a general barometer of the health of the stock market and, in general terms, the economy as a whole.

The Dow Jones can help you decide how to invest your money on both a short term and a long term basis.

Short term investments are a good option if you want to increase your money quickly and want to be able to liquidate your money sooner rather than later, such as in the chase of an emergency.

Short term assets are better than keeping cash on hand if you want to increase your money (though you should always keep some cash on hand for immediate emergencies) because they offer interest rates that can give you substantial growth on your investment.Also, short term investments can help you protect your longer term investments.You can also turn your short term investments over to long term investments if you don't need them for emergency cash.
Short term investments are classified as investments that are under three years. You should know that short term investments do pose higher risks than long term investments.Short term investments are generally classified as high risk and low yield investments.

If you decide to invest your money in stocks for the short term, then you are taking a high risk with your money due to the stock market's cyclical nature.Also, if you invest your money in stocks for less than a year, then you will have to face certain tax consequences.

While you can choose to invest your money in stocks for the short term, choosing high yield volatile stocks, many investors choose other options for short term investment.There are several options for short term investment that are safer and can protect your money better than stocks.The different short term investment options that have become popular in recent years are:

• Treasury Bills (T-Bills)
• Certificates of Deposit (CDs)
• Money Market funds

If you are looking for a long term way to invest your hard earned money, there are a number of different options available to you.Long term investments come in many different shapes and forms.You will want to consider supplementing your long term investment with short term investment options in order to provide money that is easily accessible in the case of an emergency.Talk to an investment professional about the best long term investment options for your particular monetary goals and investment philosophy.

Annuities
An annuity is essentially a contract between an insurance company and a client.An annuity can generally be deferred or immediate.If you choose an immediate annuity, you will be receiving your payout right when your first contribution is put into the annuity.If you choose a deferred annuity, then the payout will begin at a later date.

Fixed annuities
If you choose a fixed annuity, then you sign a contract with the insurance company which states that the insurance company will specify the rate of future interest and guarantee the principal that you put into the annuity.Then the insurance company chooses to invest that money into a combination of private loans, real estate, mortgages, long-term government bonds, and/or corporate bonds.This diversification into generally stable and long term investment options make a fixed annuity more stable than many other investment options.

There may be some variation in the interest rate when extended over the life of the annuity.This is because there might be growth from dividends.However, the overall changes in the interest rate will be minimal, especially when compared to different investment options, such as a Money Market Fund.