Investment Tips: Where to Put Your Money and When

Are there any tax advantages to certain investments?
U.S. Savings Bonds are exempt from state and local taxes. Municipal bonds are exempt from federal income tax. For special circumstances, such as paying for college and retirement, tax-deferred investments are available that let you postpone or even eliminate payment of income taxes.

Here are some general investing tips:

Tip 1: Diversity
Diversification increases the chance that a temporary poor performance by one asset category will be counter-balanced by good performance in another.

Tip 2: Think long-term

Tip 3: Review your needs and circumstances regularly

Tip 4: Avoid trying to "time" the market
Most successful investors do not constantly watch the markets. They also do not move their money in and out of different investments often.

What is a stock?
When you own a share of stock, you are a part owner in the company with a claim on every asset and every penny in earnings.

How much can I make?
Since 1926, the average large stock has returned more than 10 percent a year.

According to CNN.com Money 101 these are the top ten things you need to know about stocks.
1. Stocks aren't just pieces of paper.
2. There are many different kinds of stocks.
3. Stock prices track earnings.
4. Stocks are your best shot for getting a return over and above the pace of inflation.
5. Individual stocks are not the market.
6. A great track record does not guarantee strong performance in the future.
7. You can't tell how expensive a stock is by looking only at its price.
8. Investors compare stock prices to other factors to assess value.
9. A smart portfolio positioned for long-term growth includes strong stocks from different industries.
10. It's smarter to buy and hold good stocks than to engage in rapid-fire trading.

Everyone has their opinion on which stocks to buy, which ones will get you the most profit, etc. Here are some of the companies thought to be the best to invest in.
3M
Aflac
American Express
Best Buy
Cisco Systems
Disney
Harley-Davidson
J.P. Morgan Chase
PepsiCo
Texas Instruments
Walgreen

How can I buy stock?
One way is through a full service broker. Theyoffer financial planning and advice on selecting investments such as stocks and mutual funds. They usually have offices you can visit, and an individual broker is usually assigned to each customer.

What is a bond?
A Bond is simply an 'IOU' in which an investor agrees to loan money to a company or government in exchange for a predetermined interest rate." If a business wants to expand, one of its options is to borrow money from individual investors. The company issues bonds at various interest rates and sells them to the public.

What is a mutual fund?
A mutual fund allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities, usually stocks or bonds. When you invest in a mutual fund, you are buying shares of the mutual fund and become a shareholder of the fund.

Why are mutual funds good?
Mutual funds are one of the best investments because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy). By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. The biggest advantage to mutual funds is diversification.