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If you have a few thousand dollars
to invest, consider starting with a diversified mutual fund,
perhaps Vanguard S&P 500 Index or Vanguard US Growth (VWUSX).
There are dozens of high quality, no-load funds that invest in
larger company stocks. I would avoid individual stocks as they
increase both your risk and your potential for reward -- not a
prescription for a beginner.
Give your investment some time.
Don't invest in equities with the intention to pull the money in
weeks, months or even less than five years.
When you're more comfortable with
the ups and downs of the market, then you can consider
increasing your investments and broadening their
diversification, again consistent with your risk tolerance.
The worst luck a beginner can
have is making a lot of money right away. After that happens,
many decide that investments are guarantees, and they invest all
they have.
So my advice to you is to invest
a little that you can afford to lose. Watch the ups and downs of
the market and become comfortable with the volatility while at
the same time increase your knowledge in available investment
choices and risks.
Over time, you should have a
diverse portfolio of mutual funds consistent with your goals,
objectives, risk tolerance and tax situation.
author:
Gary Schatsky is Chairman of the
National Association of Personal Financial Advisors (NAPFA).
NAPFA, www.napfa.org, is a
national organization that represents fee-only financial
advisors. He lectures nationally on topics such as personal
finance, investment planning, tax planning and estate planning.
Visit his website at ObjectiveAdvice.com
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