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