Back to Basics: Part Two Lets Start Investing

August 29, 2006

Hello,

For most of us we have either Time or Money, the lucky few have both. So for those of you that has more time than money it is important to set your self up with a plan to make regular investment .It has been repeated so often most people ignore the advise but a consistent dollar cost averaging plan works over the long run. Obviously your 401k plan works on this premise. Other options are stock purchase plans or regular investment into mutual funds, but a good Financial Representative like my self can set you up and customer tailor a specific plan for you based on your goals.

For those who have accumulated some assets and have some money as well as time the first priority should be to consolidate old 401k ,403b and IRA’s in to one self directed IRA .For most people this is a tax free transfer otherwise known as a “rollover” .Most of the time it only takes a couple of weeks . It is better from an investment stand point and more cost efficient to consolidate all your retirement plans into one self directed IRA if you can. Self employed people should be looking to set up a retirement plan ASAP. Weather you use an IRA for starts or set up a SEP or a Single K plan it is very important to get started right away. Again you need to sit down with a financial representative and set up a custom plan.

Once you either consolidate or start saving then you can worry about asset allocation and diversification. Your investment choices are basically dominated by how much uncertainty you are willing to live with .Generally more uncertainty comes with higher risk investments like certain types of stocks ,commodities or futures and little or no uncertainty comes with short term low risk investments like bank CD’s or Treasury Bonds or Municipal Bonds. Many investors seem to get confused and look for higher returns from lower risk investments. Or worse own high risk investments and not realize it. A rule of thumb is that aggressive high risk investments go down about twice as fast as they went up and that you could lose all or most of your money. I have found that’s it more consistency than brilliance, meaning that for most investors it is better to look for moderate gains over the long term than trying to gamble on the next big thing.

Next part three Investment tips form the pros…

James
www.jamesfoytlin.com