Investment Basics Gives You A Snapshot of Risk and ReturnOne of the top investment basics strategies and one that allows you to accumulate wealth methodically is to permanently eliminate debt. Getting out of debt is a relatively simple process but it may not be easy. 
A starting point is to systematically pay off all your credit card and other installment debt. The next step would be to accelerate the payoff of a mortgage loan from 30 years to 15 years, for example. Once debt is erased, you can concentrate totally on various investment and money saving ideas for your future. Many people don't understand the fundamentals of investing and as a result, they may have unrealistic expectations. The two most important elements you need to consider as part of your investment information arsenal are: Low-risk investments may be appealing from a safety standpoint, but they usually provide a low rate of return. Low-risk investments are also more susceptible to the erosive effects of
inflation. If you want to earn significantly more than the inflation rate, you must be willing to accept more risk.
Here's a very basic illustration of the types of investments followed by a numerical ranking of risk associated with each category: Generally, the higher the ranking number, the higher the risk.
There are five different types of risk... Other important components in any investment strategy include:
As grandma or grandpa used to say, “you don't put all of your eggs in one basket.” This is as true for investments as it is for eggs. Speaking of eggs, investing is like baking a cake. You need to carefully measure different ingredients in the right portions. Make a mistake with your measuring or your proportions, and you won't get what you expected in your cake or your investment portfolio.
Here is an Investment Basics tip called the Rule of 72. Use the Rule of 72 as a benchmark to determine: For example, to find out the number of years it would take to double a $5,000 investment earning 6%, you divide 72 by the 6 percent rate of return giving you a result of 12 years. To determine the rate of return needed to double an investment in a given period (let's say 10 years), you would divide 72 by 10 giving you a result of 7.2 percent.
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