Guide to Individual Investment


Financial instruments offer multiple opportunities for investors. While stocks offer the biggest gains, they are also the most volatile and riskiest investments. Investing in the stock market is best for investors who are risk tolerant, those with a large disposable income or young investors who have time to recover their losses. Investing in the stock market requires good knowledge of technical strategies, understanding of a company’s balance sheet and the effect of the general economy on each individual company.  Because of the necessary time investment, many stock market investors choose to work with specialists like Fisher Investments who can do the research and provide tips and analysis to increase your chances of success.

Older investors and those nearing retirement, should avoid investing their retirement money in the stock market. Instead, municipal bonds offer a better option for younger and older investors alike who want a higher interest rate than that offered by a savings bank but without the risk of the stock market. Municipal bonds are bonds issued by government agencies and, unlike corporate bonds, are often tax exempt. Municipal bonds also have the added advantage of offering several tax credits to investors. The coupon rate of the municipal bond depends on its credit rating, with more secure companies reflecting a lower interest rate. The same is true for corporate bonds which often offer the highest coupon rates. However, corporate bonds carry a risk for default. In general, the safer an investment is, the lower the interest rate. For this reason, savings accounts which are backed by the treasury often pay out the lowest rates.

Despite the relative safety of a savings account, the notion that you can’t lose money in a savings account is false. Although saving accounts carry the lowest risk, they are only guaranteed by the treasury up to a certain amount. Losing money in a savings account is rare. If this were to happen and you were to becaome unable to pay your monthly bills you should look into a Fayetteville GA bankruptcy attorneyHowever, interest rates that are lower than the inflation rate actually reflect a loss on the account. Although the amount of money seems to be growing, the purchasing power decreases each year.

An IRA account offers several tax benefits, with most IRA accounts allowed to grow tax free. In a Traditional IRA contributions can be deducted from the yearly income. The maximum amount of money that one can invest is $5000. Contributions into a Roth IRA are taxed, which means that no additional tax has to be paid when the money is taken out of the account. Because of these tax differences, investors in the highest tax brackets would benefit from a Traditional IRA since the funds in this account are taxed based on the investor’s tax bracket at the time of withdrawal. If your are interested in more information on tax liabilities it can be found at  or directly from the U.S. treasury at  However, investors who start their IRA account early into their careers, especially in fields where their income in more probable to grow with time, should opt for a Roth IRA instead.