| You can start investing the right way or the | | | | proportion for your contributions in either case. |
| wrong way. You can invest in mutual funds, which | | | | If you are conservative make your equity fund a |
| make investing easy; or start investing by the | | | | large-cap equity fund and your bond fund an |
| seat of your pants like so many people do. Here's | | | | intermediate-term quality bond fund with an |
| a simple way to start investing and stop worrying | | | | average maturity of 5 to 8 years (less than 10). |
| about the stock market and the economy. | | | | This info will be in the fund literature you receive. |
| First, face up to the fact that you need to invest | | | | If you are willing to be a bit proactive and take a |
| to reach your financial goals. This means investing | | | | moderate approach consider more than one |
| in stocks and bonds. Second, you need to | | | | equity fund, like a large-cap plus a mid-cap core |
| question your abilities and interest in the investing | | | | (or blend) fund. Maybe add a shorter-term bond |
| process. Do you see yourself actively managing a | | | | fund in addition to the intermediate fund. And for |
| portfolio of individual stocks and bond issues year | | | | the international & specialty: half goes to a |
| after year? If not, join the club and start investing | | | | diversified international fund with the rest equally |
| in mutual funds. One more thought before we get | | | | split between specialty funds in the real estate |
| specific. You don't invest in mutual funds to beat | | | | and gold sector. |
| the market or get rich quick, but rather to earn | | | | For the money market fund just go with their |
| higher returns over the long run with moderate | | | | oldest and/or largest general purpose taxable |
| risk. | | | | fund. Review your numbers once a year, and |
| If you are actively contributing to a 401k type of | | | | move money around if things get off track. For |
| pension plan you are already set up and can hit | | | | example, if you are conservative you want to |
| the road running. If you have money in an IRA | | | | keep equal money in all three areas. This is called |
| consider a direct rollover to a mutual fund | | | | rebalancing your portfolio, and it's a valuable |
| company. Otherwise, just open a mutual fund | | | | investment tool that keeps your risk in line with |
| account with a major no-load fund family. Just | | | | your comfort level. |
| search the internet for "no-load funds". In the last | | | | Now, you ask, if you start investing like this and |
| two cases above, start your new account with all | | | | continue to rebalance year after year... do I |
| of your money going to the safest funds offered | | | | guarantee you'll make money and reach your |
| - a money market fund. | | | | financial goals? Sorry, no guarantees, but I'll put it |
| Now you are ready to start investing in mutual | | | | this way: in good times you should be quite happy. |
| funds the right way with a simple yet balanced | | | | In bad times when others are stressing out over |
| portfolio that won't keep you up at night. It's time | | | | their heavy losses, you'll merely be taking a |
| to move some money around; it's time for asset | | | | modest step backward waiting for things to turn |
| allocation. If you are conservative split your | | | | around. |
| money up three ways equally: money market | | | | Is there another shoe to drop - another financial |
| fund, bond fund, equity (stock) fund. If you are | | | | crisis around the corner? If so, 99% of investors |
| willing to take a moderate risk split it four ways | | | | will be hurt. But with a balanced portfolio and a |
| equally: money market, bond, equity (U.S.) and | | | | plan you have history on your side. In the past, |
| international & specialty. If you are adding | | | | diversification across the asset classes worked to |
| money periodically like in a 401k, use the same | | | | offset major losses. |