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Career means it's time to start investing for the future
Posted on: 2005-09-20 08:30:05 It's tough for the novice to decide how best to invest By BECKY PIEDEL Date published: 9/19/2005 I DON'T KNOW how to spend my money. My income during college came from three sources: stocking shelves at the university bookstore; gas mileage reimbursement checks from the school newspaper; and, of course, Mom and Dad. I always knew where those funds were going--to books and burgers and beverages--and it seemed like I barely ever had enough to get by. Now I have a career, and with that, a steady income, but I don't know what to do with the leftover loot piled in my piggy bank. That half-cent of interest I'm racking up in my savings account every month just isn't cutting it. I think it's time I started investing. But I'm not interested in interest rates, and I believe that CDs are to be listened to, not invested in. Oh, and about the 401 (k)--is that a robot from "Star Wars" or something? I feel like a financial ditz, but now's my time to change before I run out of change. I poked around the Internet looking for financial advice the other day. I'm a new investor, and I'm a chicken when it comes to taking chances, so I want a conservative investment plan. I came across penny stocks. Hmm, those sound affordable. I wanted to know more. I read on for about two lines until I came across the words "high" and "risk." My fingers frantically directed the mouse to the "back" button. Click! All safe. I quickly realized that my search on the World Wide Web wasn't going to get me very far, so I consulted a friend who consults a financial adviser. Come on, I'm not really going to pay for my own. He told me that CDs--or certificates of deposit--sound more my style. They provide a fixed rate of income over a fixed period of time, so I'm guaranteed to make at least a little cash. The only bad thing is that if I want my money before the certificate has matured, then I have to pay a penalty to get it. Hmm. I don't like the sound of that. A co-worker linked me up with an investment representative. She recommended that I find out about my bank's early withdrawal penalties before I dip into a CD. She also said that CDs are good when you're looking to make money in the short term, but if I'm looking to ride my investment for 10 years or longer, then I should probably plant my dough in mutual funds. A mutual fund, she told me, is a bunch of different stocks put together. It spreads out the risk to 150 to 200 companies so you don't depend on one company to make or break you. Young people can weather changes in the stock market and take more risks, she said. Time is really your best friend when looking at an investment. Back up. Take risks? Oh, that doesn't sound like me. Pass! But the market goes through cycles, she said. It fluctuates, but has trended upward in the past 70 years. She assured me that because I'm so young, I can ride through the down periods. Strap me in to the stock market roller coaster; I'm ready to invest. Almost, at least. First, I asked her about 401k plans. I've heard of those, and they sound like they might be a good idea. When you start working at a company, she said, you should be given a summary description of your plan, including different areas to invest money in, like big companies, small businesses, or bonds. Most companies offer some sort of match--usually 50 cents on the dollar--up to a certain percentage, so it's good to contribute as much of each paycheck as you can. Sounds like free money to me, and I can't complain about that! If your company doesn't match or doesn't have a 401k plan at all, she recommends investing in a Roth IRA. It's kind of like a 401k away from work, except the money is taxed now instead of later, so when you go to cash out down the road, you don't have to worry about those pesky tolls. Phew, that's a lot to take in. I'm still not certain what I'll do with my money. Maybe I'll start up my 401k, or then again, I might side with CDs, but one thing's for sure--I'm going to make it grow. To reach BECKY PIEDEL: 540/374-5000, ext. 5765 bpiedel@fredericksburg.com Date published: 9/19/2005 Homepage Please support are sponsors. To design you custom retirement plan. http://www.retirement-plan.us For planing a IRA rollovers. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Professional money management: National ranked performance. http://www.roth-ira.us Managers selected to fit your needs. http://www.money-managers.us |