Keys to Smart Investing

Adopt a Stock Portfolio (They’re Very Cute.)

There are other avenues of smart investing. Let’s talk portfolio! Your portfolio is a collection of the different investments that you make, and can include commodities, stocks, cash, and bonds.

Jason Kelly, author of The Neatest Little Guide series of books on investing and money, says that you should start with something foolproof. “Buy the S&P 500 via an index fund and you'll own the stock market. You can't make a big mistake,” he says. The S&P 500 is an index of stocks of large, public companies with a proven record over time that will ease you into the investing waters. They are stable and don’t require much maintenance; they are basically the stock market itself. It will help you understand the trends of the market overall and there’s very little risk that an investment like this will cause you to lose all your money. Another good direction is to open up a brokerage account that allows you to purchase funds directly. These are all stable, low-risk, and slow moving. They require little on your end, but they won’t make you a millionaire any time soon.

Once you’re comfortable, you can get into other ways of investing (such as picking and choosing your own stocks) and add to your portfolio wisely.

Which Way to the Stock Market?

Experts are not all in agreement on this, but what smart investing really comes down to is who you are. There are plenty of inside trader secrets that you can discover by leafing through investment magazines and blogs, but the best way to create a system of buying and selling stocks and bonds, and building your portfolio boils down to the type of person you are. If you’re the type who gets a thrill out of buying and selling things, the stock market is the perfect place for you. If, on the other hand, you recognize that you’re lazy when it comes to most things, investing included, playing the stock market may not be for you.

Ron and Kathy Jones decided that they wanted to start planning for their retirement and for the future of their family. Ron works independently as a marriage counselor, and Kathy is a stay at home mom who wanted to help her husband by investing. "After doing some research, I discovered that the best way for us to invest was to put money into real estate," she explained. "I don't really trust the stock market." Having a background in landscaping and carpentry, she bought run-down houses and fixed them up, selling them for two to three times their original value within a few years. Now they own five houses, renting several out to help pay the mortgages, as well as over 100 acres worth of beautiful mountain valley property upon which they plan to build a ranch and spend their retirement days watching Old West sunsets from their front porch.

The bottom line with all investing is to lean toward what you enjoy. The good news is that no one is going to make you invest in something you don’t like. If you’re interested in technology, invest there. If you find yourself pouring over world news, go foreign. If you want to be cautious, go with bonds. As long as you’re educated, you can’t lose.