It can be quite discouraging for investors when debacles like auditing scandals or Enron bankruptcy happen. They wonder if the risk they are taking by investing in stocks is worth it. These apprehensions stem from some common myths about investing stocks. Investors need to have a realistic idea of the stock market before they take the plunge. Five of the most common myths are discussed below.

1) Stock Market Investment is akin to gambling.

This misconception would sound very ridiculous for stock market experts. This is one of the primary reasons why most people shy away from stock market investments. For these people, shares are like a trading vehicle. They forget the fact that buying shares is buying a part-ownership of a company. Whenever a company generates profits, the holder of the shares is entitled to receive a part of it. It also entitles him to a claim on the assets of the company. Stock prices fluctuate when investors constantly attempt to assess the profits left over for shareholders. Moreover, a company’s outlook and its future earnings always keep changing. These fluctuations are quite natural.

Gambling creates no value in a transaction. It is like taking money from one person to give to another. Investing, on the other hand, leads to growth of the economy. As the economy grows, there is greater competition amongst companies leading to an increase in productivity. As a result, they manufacture products that better our lives.

2) The Stock Market is a club restricted to brokers and affluent people alone.

Recent studies have shown that anybody can invest in stocks. You need not have a lot of experience in analyzing stocks. Although brokers claim that they can predict the market, their prognostics have been inaccurate most of the time. As a consumer, you are empowered with the most effective tool – the internet. You have the access to all data and research about the market, which was available only to brokerages earlier.

As individuals, you are not under a lot of pressure to produce high returns in a short period, unlike money managers. Hence, you can afford to be long-term oriented.

3) Fallen stocks will rise eventually

This misconception could prove very disastrous for investors. It might sound like a good idea to buy a stock that hit a high recently, but fell back sharply. You do it with the hope that the stock will rise up to those levels again. The hard truth is – a fall in market price is never a good reason to buy a company’s stocks. A better way to do it is to buy a good stock at a reasonable price.

4) Stocks that rise must come down.

The law of gravitation has no connection to the stock market. This myth often forces people to wait till the stock value comes down before they can invest again. Eventually, the stock keeps rising and they end up regretting not having bought it at a lower price.

5) Investing in the stock market requires only a little knowledge.

It cannot be denied that knowing a little is better than knowing nothing. However, when you are investing in the stock market, you need to have a clear understanding of what you are doing with your money. Do not invest when you have not done enough research and gathered enough data to help you take a wise decision.

If you feel you cannot do it all by yourself, there is no harm in hiring an advisor. Hiring an investor costs far lesser than the losses you might incur if you invest in something you do not understand.

Remember the old adage, ‘a little learning is a dangerous thing,’ before you invest in the stock market. As an individual, you must have a clear understanding of how stocks function. And remember, popular misconceptions are not the ultimate truth. Make sure you are demystified about the stock market before you spend your money.

Locking yourself info a long term (for example: 5 years) CD account is usually a great, secure way to put some money away on the side and earn some good interest from it. The problem is the current interest rates on CDs aren’t paying very high. What should you do is the question.

BankRate.com offers a trend index which is updated on a weekly basis. They give a full analysis on current interest rates and the future trends; this is a great place to start. The problem with investing in a CD is to earn a higher interest rate; you need to lock into a long term. That longer term means 2 things: 1. you have no access to your money for a longer period of time, and 2. you are susceptible to being “long and wrong”.

The solution: well there are a few ways to manage your risk when deciding to invest in a long term CD, 2 of which I will list and explain.

I. Invest in a bump-up CD.
A bump-up CD is the same as any regular CD investment except for one thing: These CDs allow you to take advantage of higher interest rates by having the bank “bump-up” your interest rate if rates increase. Most banks only allow 1 “bump-up” per CD and usually the depositor is given only a short amount of time after the initial investment to take advantage of this.

II. Build a ladder CD portfolio.
A CD ladder “allows you to take advantage of interest rates spread over several maturities without sacrificing liquidity.” For in in-depth look and analysis on CD ladders, check this site: http://www.bankrate.com/brm/news/sav/20010521b.asp

Because of the internet boom of the late 90’s and the huge role the internet plays in our everyday lives millions of investors have started moving to online brokers. Thanks to today’s technology, these online brokers are able to offer low commission trades (many less than $10 per trade) for the average Joe which can be completed in less than a minute.

There are over 100 well known discount online brokerage firms which offer online trading to anyone with internet access and funding. Included in the dozens of online firms are major brokerages such as Charles Schwab and Waterhouse who have launched separate branches dedicated to online trading. Additionally, new companies have pooped up whose sole purpose and functionality is online trading, among these are: Ameritrade and eTrade.

One common misconception when looking to start online trading is the idea that all online brokers are the same aside from their commission fees. This is quite the opposite. There are dozens of differences in online brokerages, and taking a look at these differences is crucial to running a successful and comfortable online portfolio. Some brokerages offer better research and analysis of investments than others do, while those others may have a better chance of getting you in on the ground level of that hot new IPO. The following are some important points which you should consider when choosing an online broker:

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In the past 5 years the real estate market has encountered a tremendous boom. No branch of real estate, however, has had more success than waterfront property. The waterfront is held in such high regard for one reason and one reason only, it’s rare. Unlike the Nebraska farmland or the California woods, there is a small amount of available coastline. People are dieing to get a piece of it and the property prices are skyrocketing due to it scarceness.

For example, in 1989 a new family was able to purchase a waterfront property in the wealthy suburbs of Fairfield County, CT for just over $750k. This property was about 1 quarter acre, direct, unobstructed beachfront, tall ceilings, 3 bedrooms, 3.5 baths. Minimal work was needed. 15 years later a renovation was started. After 2 years and $300k of construction the home was put on the market and sold 2 weeks later. The selling price: $4,000,000. Nearly 300% profit, netting just under $3million in gains.

Second example: A young couple moves to Miami Beach, FL a year ago. After searching for property they have narrowed it down to 2 choices. A large, lavish home just outside of Miami Beach or a much smaller but very well kept two bedroom waterfront condo in a large building. Once again this is direct waterfront, unobstructed. They decided to go with the condo and spent $550k. Very recently the condo was sold, they did no work on the unit nor did they upgrade anything. They received a high offer of $1.15 million. Over a 200% profit.

With finance rates at their current lows, NOW is the best time to get into the waterfront real-estate market. People always speak of a big real-estate crash, but with waterfront, you’ve invested in something secure, something that will always be there and will always be in demand.