| So you've just plunked down a cool three grand | | | | years, look into a savings account, money market |
| on the latest, greatest, behemoth high-definition | | | | fund or certificate of deposit (CD). You won't be |
| plasma TV with all the bells and whistles. You | | | | rubbing elbows with Bill Gates anytime soon, but |
| have all your friends over for the big game, and | | | | these funds do offer limited growth for the short |
| while their gazes are fixed to the vivid colors and | | | | term. |
| much-too-clear close-ups of sweaty 300-pound | | | | But if you want to see a real return on your |
| linemen, the only thing you can focus in on is a | | | | money, always invest for the long term. Put |
| serious case of buyer's remorse. | | | | away money that you know you won't need until |
| Sure, the TV is nice and all, but deep down you | | | | a long way down the road, like retirement. |
| know it wasn't the wisest of financial moves. | | | | Stocks, bonds and mutual funds are all great |
| Ready to ditch your spendthrift ways and learn | | | | long-term investments, with stocks historically |
| how to invest, rather than waste? Then read on, | | | | showing the highest rate of return over time. In |
| my friend. | | | | fact, from 1926 to 2005, S&P 500 stocks |
| Rule: Dump high-interest debt first | | | | showed an average annual gain of 10.46 percent. |
| First things first, before you even start to think | | | | That's more than double of what bondsthe next |
| about investing, you must get rid of your | | | | highest performerreturned in the same time |
| high-interest debt. That means credit card | | | | period. |
| balances have got to go. Sit down, crunch the | | | | Rule: Do not, we repeat, DO NOT, invest in |
| numbers, and put together a plan that will quickly | | | | stocks short term |
| eliminate this debt. Most credit cards carry an | | | | On October 19, 1987, the stock market crashed |
| annual interest rate of 16 to 21 percent. | | | | 22.6 percent. It was the biggest one-day drop in |
| If only you could get that kind of return on your | | | | history. If you invested in the stock market |
| money! Credit card companies are raking in the | | | | around its peak in 2000, three-fourths of your |
| dough on interest fees that continue to compound | | | | money would have disappeared in the next three |
| month after month. It's a vicious cycle, and one | | | | years. The lesson: stocks are not for the |
| you need to break free of. Try not to use credit | | | | impatient. Stick with them through the years, |
| cards at all, and if you find yourself in a bind and | | | | though, and history shows you'll be very happy |
| absolutely have to swipe the plastic, pay off your | | | | when it's time to cash out. |
| balances in full each month. | | | | Rule: The worst investment strategy is doing |
| Rule: Invest for the long-term | | | | nothing at all |
| Okay, once you're free of that high-interest debt | | | | Sure, markets rise and fall, and there's no |
| (low-interest and tax deductible debt like a | | | | guaranteed amount that you're going to make on |
| mortgage or student loan can actually be | | | | your investments long-term. But whatever you |
| advantageous) and you have a nice little chunk of | | | | make, it'll be a lot more than if you invested |
| change to stash away, you're ready to invest. But | | | | nothing at all. Also, the longer you wait to invest, |
| where do you start? Good question. | | | | the more money you miss out on in the long run. |
| There are so many ways to invest your cash, all | | | | Thanks to the wonderful world of compounding |
| of them offering different advantages and | | | | interest, time is money in the investment world. |
| disadvantages. If you know you're going to need | | | | The TV can wait; start investing as soon as you |
| access to your money within the next couple of | | | | can. You won't be sorry. |