BASICS - 101
investors agree: you can earn good profits without a lot
of risk if you stick to a few tried-and-true investing
- First, start early. Give your
funds plenty of time to grow. Say, for example, you
invest $100 a month toward your newborns college
fund. At a return of eight percent, that money will grow
to about $48,000 by the time your child graduates from
high school. Wait until your little baby is ten years old
to start investing and youll have to set aside much
more - over $350 a month - to accumulate the same amount
by age eighteen.
- Second, invest regularly.
Its a good idea to have money periodically deducted
from your checking account and put into mutual funds,
stocks, or bonds. This method is called
dollar-cost-averaging. What you dont see, you
wont spend. Pay yourself first.
- Third, diversify your
portfolio. Buying mutual funds is a great way to achieve
diversity. If you plan to invest in individual stocks and
bonds, consider this: The longer you can leave your money
alone, the more you should invest in stocks. For added
safety and liquidity, keep some bonds and cash reserves
in your portfolio.
- Fourth, hold down your
expenses. Stick with no-load or low-load mutual funds,
and beware of funds with high fees for professional
management. Dont wheel and deal very often.
Commissions for buying and selling securities can take a
big bite out of your returns.
- Fifth, insist on quality.
Familiarize yourself with the companies you plan to
invest in. Beginners are advised to focus on blue-chip
stocks with good track records.
- Finally, be patient. The surest
way to increase your wealth is not glamorous. Its
done by letting time and the markets upward trend
work for you. Remember, MONEY takes a manager!