Investing 101 in your 20s

Speculative stocks should be paramount for an investor in their twenty’s. Twenty somethings have the graces of youth and many years left to work.This is why they have the ability to get themselves going when it comes to investing in speculative stock that could take off and retire them in their thirties.

Investing in speculative stock is a bad idea for your older investors because of the limited time they have left to earn income, but for an investor still in their twenties it could make the difference on what they can earn over there working life span. The profits gained from these higher risk investment opportunities could be substantial and as you get older these gains that you made in your twenties can really give you some serious buying power in your thirties.

Any gains you make on speculative stock should be put into less risky types of investments such as ETF’S, preferred stocks and stocks that fit the best of breed category. Best of breed is a company that is a leader in it’s perspective sector or industry. The importance of reinvesting your money that you earned on higher risk types of investments into less risky types of investments is extremely necessary.

The reason is because of something that I call the casino effect. The casino effect is simple, when you win on a slot machine and you take that money and continue to play that same slot machine, you are most likely going to put all the money gained back into that machine and some extra. In essence the same thing can happen when you play a speculative stock.

When it comes to a speculative stock the best way to play them is to get your money and run if you get the chance. This is not true of all speculative stock because some of them actually take off and become top performers in their sectors. If you do your homework you will be able to know if your speculative stock is one of these stocks that do actually make it big and become a sector mover.

Another important topic to address with new investor’s is gaining knowledge. You need to have some education in the area you are planning to start investing. For instance if you are going to invest in stock,read some books written by people who have made money investing in stocks. Maybe you can pick up some pointers on how you can go about doing your homework on a company before you buy it. Another way to increase your ability to gain on your investment is to take a class or two on what you are trying to do. Know matter what type of investment you make you need to know about what your investing in and about how you can correctly and safely put your money in without getting annihilated on your first day.