When entering the investment business, you must be ready to do extensive research on the investment possibilities, set long-term goals and accomplish them, hold on to the investments for as long as necessary, and try not to panic in case the market falls.

One of the most important parts of becoming a successful investor is to be confident when entering the market.

There are three major investment areas, which you need to consider when becoming an investor: cash, real tangible assets and financial assets.

1. Cash is the money you carry in your purse, the money you have in your saving account, as well as money market accounts, short-term deposit certificates and treasury bills. Cash is the investment, which should be a part of every investment portfolio. The amount of cash you should invest in it depends on your personal financial situation, your business, as well as the economy as a whole. A good rule of the thumb is to keep at least six-months worth of cash for living expenses. This may not be possible, so it is a good idea to keep cash to cover several months of living expenses, to cover any emergency payments, etc. Many people don’t keep cash in their bank accounts, and rely on their credit cards in cases of unexpected costs and emergencies. This is surely not the wisest and most economically effective way to invest, because of the very large interest rates of credit cards. Even though cash is a good investment in times when the economy is in crisis, and the interests are high, it can lose its value in times when the economy is normal and the inflation “eats up” cash’s buying power.

2) Real assets are the tangible assets such as: buildings, other real estate, antiques, paintings, gold, etc. Often buying our own home is the first large real asset investment we make in our lives. Other real asset investments may include the purchase of antiques, gold and other precious metals, paintings and other artwork, as well as more real estate of course. Unfortunately, investing in real assets can be risky, because of their evaluation, which can be very subjective. Also, the commissions asked for trade transactions with such expensive assets are usually quite high. Even if you try to sell them on your own, finding a buyer at a good price may often be difficult or even impossible. Real assets tend to rise in value, when the stock market is down, which is a good side of deciding to invest in tangible things.

3) The third type of investment you should consider is the financial assets investment.

Financial assets include: stocks and/or bonds. Stocks are shares of a certain company, while bonds are loans you make to a company or other organization. It is a good idea to diversify when investing in financial assets. In other words, spread your investment money among various companies and loans. Also, consider investing through a mutual fund, which will allow you to have ownerships of various companies. When you buy stock from a company, you purchase a small piece of its business. You will have the right to vote at the shareholders meeting and take part in the management elections, and have a say in the business as a whole. When you are a shareholder in a company, you will be inclined to receiving dividends as well. Once again, buying stocks can be risky, especially the stocks of smaller companies. If you decide to invest in bonds, you must know that by buying a bond you are actually loaning money to a certain company, municipality or government. The deal is that the bond-issuer agrees to pay-back the loan with a certain amount of interest and in a certain period of time. The bond issuer is also obliged to pay back the principal at the specified date.

Like shares, bonds vary in accordance to their riskiness. The treasury bonds of the USA for example, are much more reliable than the bonds issued by a small and unknown company.