investment for beginner

							                                                        Investing
                                                                                                                  Feed It Early and Often                           Don’t be Your Own Worst Enemy
                                                                                                                  If there is any one single thing you can          The best time to buy stocks is when everyone
                                                                                                                  do to boost your profits in stocks, it’s to       is so scared it seems like the worst thing


                                                          for                                                     start early in a tax-deferred account like
                                                                                                                  an Individual Retirement Account or a
                                                                                                                                                                    to do. This is when they are the cheapest.
                                                                                                                                                                    But this advice is impossible to follow,

                                                        Beginners
                                                          avoid the classic mistakes
                                                                                                                  company 401(k). This way, you let the
                                                                                                                  magic of compounding work for you
                                                                                                                  — meaning you earn money on your
                                                                                                                  reinvested earnings.
                                                                                                                                                                    because your gut will be screaming to stay
                                                                                                                                                                    away from stocks. To solve this problem,
                                                                                                                                                                    follow a neat little trick called “dollar
                                                                                                                                                                    cost averaging.” Put the same amount of
                                                                                                                     If you put $100 a month in a tax-              money in the market on the same day of
                                                          of playing the stock market.                            deferred account starting at age 35, you          each month, every year, no matter what.
                                                          By Michael Brush                                        will have $280,000 at age 65, assuming            This robot-like approach means that at
                                                                                                                  11 percent annual gains. Start at 25, and         least some of the time you will be buying
                                                                                                                  you will have $860,000. Get the point?            stocks when they are dirt cheap — and
                                                                                                                  One exception: If you carry credit card           boosting your returns.
                                                                                                                  debt, pay that off first because your mar-
                                                                                                                  ket gains will be no match for enormous           Take the Free Money
                                                                                                                  interest-rate charges.                            If your company matches your 401(k) contri-
                                                                                                                                                                    bution, always kick in the max. That company
                                                                                                                  Have reasonable Expectations                      match represents an instant 30 percent to 50
                                                                                                                  One of my favorite stock pundits, the             percent gain — returns that would be the
                                                                                                                  author Martin Pring, likes to say that the        envy of even the best market pros.
                                                                                                                  market exists to exploit the character flaws
                                                                                                                  of investors. If you bring a sense of greed           if you bring a sense of greed to the
                                                                                                                  to the market — say you dream of hitting              market — say you dream of hitting it
                                                                                                                  it big to buy a new flat screen TV — your
                                                                                                                                                                        big to buy a new flat screen tV — your
                                                                                                                  judgment will be clouded, and you will
                                                                                                                  make some expensive mistakes. On aver-                judgment will be clouded.
                                                                                                                  age, the stock market returns about 12
                                                                                                                  percent annually over the long term. This         Be in for the Long Term
                                                                                                                  is your goal.                                     You “save” money for near-term goals like
                                                                                                                                                                    buying a new car. “Invest” money you
                                                                                                                  Put Your Eggs in Many Baskets                     won’t need to touch for five years or more.
                                                                                                                  Another common mistake is loading up on           That way, you won’t be forced to pull out
                                                                                                                  a single stock because you are wowed by a         of stocks at the worst time to fund some
                                                                                                                  story or because you accumulate a lot of          short-term need.
                                                                                                                  your company stock in your 401(k). This is           I may not have instructed you on how to
                                                                                                                  a sure path to disaster. Just ask anyone who      “strike it rich” in the stock market, but by
                                                                                                                  worked at Enron. To diversify, buy mutual         following these rules, in the long run, you
                                                                                                                  funds, especially broad market index funds        will do better than the desperate gamblers
                                                                                                                  that hold hundreds of stocks.                     who inevitably wind up making all the


                W
                             ho hasn’t turned green with             sooner or later. But you won’t hear that                                                       classic mistakes.
                             envy as some market brag-               part of the story.                           Be Cheap
                             gadocio at a party spins out a            Instead of trying to strike it rich on a   With mutual funds, keep expenses low.             Michael Brush is an award-winning New York–based fi-
                tale of spectacular gains in a stock? Now            single stock, the smart way to win with      Studies show you don’t need to pay extra          nancial writer who has covered business and investing for
                let me tell you a little secret I’ve learned         stocks is to avoid the classic mistakes by   fees to get better performance. Avoid “load”      The New York Times, Money, and the Economist Group. He
                in my 20 years of writing about the stock            following seven basic rules. They won’t      funds that charge you money for getting in        is the author of Lessons from the Front Line, a book offer-
                market: The overnight success typically              make you an instant millionaire, but slow    or out, and with managed funds, look for          ing insights on investing and the markets based on the
                gives the money back with a string of losses         and steady will win the race.                an expense ratio of 2 percent or less.            experiences of professional money managers.



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