| The best stock investment strategy for | | | | into a nose dive. What do you do? Since your |
| beginners focuses on stock funds as the best | | | | equity funds will fall as well, if you fall below your |
| stock investment to keep it simple, and | | | | 50% target you move money from your safe |
| emphasizes investment strategy over stock | | | | money market fund into equity funds. In other |
| picking. You don't need to pick the best stock or | | | | words, you buy stocks when they are getting |
| even the best stock funds to do well if you have | | | | cheaper. On the other hand, if stocks go to |
| an investment strategy that keeps you out of | | | | extremes on the up side, what do you do? |
| trouble. Here's how to keep it simple and make | | | | If your equity funds represent 60% or more of |
| money, with less risk. | | | | the total, you cut back to 50%. In other words, |
| Funds that invest in stocks are often called equity | | | | you take some money off of the table. How |
| funds and they come in two popular varieties: | | | | often should you move money back and forth? |
| mutual funds and exchange traded funds (ETFs). | | | | This best investment strategy is meant to be |
| You can best get started on your own in one of | | | | simple and not time consuming. When your asset |
| two different ways: by opening a mutual fund | | | | allocation gets to 60-40 or 40-60, it's definitely |
| account with a major no-load fund company, or | | | | time to move money. If you want to be more |
| by opening a brokerage account with a discount | | | | active, use 55-45 or 45-55 as your guidelines. |
| broker. Either way, you can put the best stock | | | | This stock investment strategy makes the buy |
| investment strategy for beginners that I know of | | | | and sell decisions for you so you can relax. |
| to work for you. | | | | Consider the bear market of 2008 when the |
| Earmark this account as your stock investment | | | | market fell by over 50% by March of 2009. |
| account. All of your money will be either in stocks | | | | Stocks then went up about 70% over the next |
| (equity funds) or in cash in the form of a money | | | | 12 months. Did most investors make money? |
| market fund that is safe and pays interest in the | | | | Quite the contrary. They made poor decisions |
| form of dividends. The key to our best | | | | because they got scared and lacked a sound |
| investment strategy is that you are never 100% | | | | investment strategy. With this simple plan, you |
| invested in equity funds or stocks, and never | | | | would be doing just fine in 2010. Plus, there would |
| 100% invested on the safe side. Instead, you pick | | | | be no reason to fear a market reversal, because |
| your target allocation and stick with it. I'll give you | | | | you have an investment strategy. |
| an example. | | | | It's easy to move money back and forth |
| You don't want to be too aggressive, so you pick | | | | between mutual funds, but be a bit careful. Don't |
| 50% as your target allocation to stocks. This | | | | do it any more often then is necessary. Second, |
| means that no matter what happens in the | | | | to keep the tax issue simple do this in an account |
| market, you will keep half of your money in | | | | that is tax deferred or tax qualified... like an IRA |
| equity funds and half in the safety of a money | | | | or 401k. You can roll your existing IRA into an |
| market fund earning interest. This is your | | | | IRA with a no-load mutual fund company. Then |
| investment strategy, and it takes the need to | | | | your buy and sell transactions are not reportable |
| make micro decisions out of the picture. You | | | | for income tax purposes. |
| have a plan and you intend to stick with it to | | | | Do not go into the stock investing game as a |
| avoid major mistakes and the major losses that | | | | beginner trying to pick the best stock investment. |
| can result from emotional decisions. | | | | You'll never do it. Instead, go with a few equity |
| Now let's take a look at how this simple | | | | funds, and include international equity funds as well. |
| investment strategy works to keep you out of | | | | Then concentrate on the best stock investment |
| trouble. Bad news hits the market and stocks go | | | | strategy and sleep well at night. |