The investment industry has been in the spotlight a lot lately. John Q Public has heard an awful lot about how shady stock brokers have almost ruined the economy, and people who were confident in the money they were making from their investments, are now unsure if they’ll have anything for retirement. Indeed, playing with investment finance can be a risky venture, but, if you have the capital and the patience, it can also be quite rewarding. The important thing is to have thorough understanding of what investing is and how it works before sending your precious money out into the great unknown.

The first step to responsible investment finance is learning what the different elements are. For instance, do you know the difference between a stock and a bond? A stock is a representation of shared ownership in a company. That’s right- if you own stock in a company, even just one share- you are called a shareholder, and have a tiny share of the ownership of that company and are entitled to a share of the profits, called dividends. Sounds great, right? The catch is that the value of a share of stock may increase or decrease, sometimes drastically, depending on how the company is performing, and other economic factors. A bond is another term for a loan made to a company, or in the case of war bonds, the federal government. The entity to which the bond is given is called the issuer, and in return for the bond, the issuer agrees to pay back the loan to the bondholder with interest and within a certain period of time.

Money market instruments are another important element of investment finance. Unlike stocks and bonds, which for various reasons can be quite risky for the parties involved, money market instruments are generally considered to be relatively low-risk investments. Also referred to as cash equivalents, money market instruments are short-term loans or debt obligations made to companies or government agencies for return with interest. A longer repayment period for cash equivalents usually diminishes the amount of return seen by the investor.

Asset allocation, the way that investors divide their money between one or more of the above mentioned investment options, is paramount in successful investment finance. Consult with a financial planner, investment advisor or other wealth management professional to help you construct a solid portfolio that will provide you with consistent returns instead of a rollercoaster ride of making, losing and re-making money.

Everyone wants to know how to become rich, the faster the better. Many people are frustrated with their current financial situation, but don’t know what to do to change it. The first thing you must realize is that sound strategies, not get rich quick schemes, are the best and most sure way to build lasting wealth for you and your family. Many people also think that you have to be born into wealth, have rich relatives or make it big on the stock market or in Silicon Valley. These are also myths. Ordinary people can build wealth, maybe not overnight, but definitely in time to send the kids to college and retire comfortably, just by keeping a few simple strategies in mind.

The first step to learning how to become rich is to invest in you first, and pay bills second. Now, before you go out and buy yourself a Jaguar, think about the more practical application of this idea. Each time you get a paycheck, immediately divert some of that money into a 401(k) or 401(b) plan. If you’ve never taken advantage of the plans offered by your employer, now is the time to start. If your employer doesn’t offer a retirement or savings plan, do a little research and open a high yield savings account that is separate from your other bank accounts. Online savings accounts like those offered by ING can be useful for this. The key to being rich is to start setting money aside as soon as possible and as consistently as you can.

Now that you’re determined to start saving, the next step toward learning how to become rich is to pay those bills! Credit cards and other excessive, high interest debt is the first way to sabotage your efforts to become wealthy. Consider a lower interest debt consolidation loan that will allow you to pay back the debt with one easy payment each month and in a much shorter period of time than you would be able to making the creditor’s minimum payments.

Investing wisely is another important step to learning how to become rich. Take the time to discuss your portfolio with a financial advisor and diversify your investments so that they can remain as stable and profitable as possible. If, unfortunately, the worse possible scenario occurs and your investments lose money, then you’ll be happy you’ve been saving that rainy day money to cover your expenses while you wait for your portfolio to recover.