Things You'll Need:
- Financial Calculator
- Brokerage Accounts
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Step 1
Set goals. If your objective is retirement, calculate how much you'll need vs. how much income you'll have (pension plan, Social Security) when you retire.
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Step 2
Choose a strategy that will enable you to meet your goals. Brokers and others offer conflicting advice on the best way to allocate assets (or choose a mixed approach to investment), so talk to financial advisors, read financial newspapers and magazines, and visit financial Web sites. In short, do some research.
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Step 3
Pay yourself first. Set aside 10 percent of your annual income and invest it.
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Step 4
Take full advantage of your employer's 401(k) plan, investing as much as you can in it.
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Step 5
Invest in an Individual Retirement Account or Keogh plan if you're eligible.
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Step 6
Put your money in conservative investments at first; for example, mutual funds that buy a variety of blue-chip stocks. After you have a solid foundation, you can choose higher-risk investments.
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Step 7
Diversify. Buy a variety of investments; for example, if you're investing in mutual funds, you might put 30 percent of your money in growth funds, 30 percent in aggressive growth funds, 20 percent in tax-exempt bond funds and 10 percent in money-market, checking and savings accounts.
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Step 8
Buy what you know. If you go beyond mutual funds and decide to buy individual stocks, invest in local companies that you know something about.
