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For whatever reason, I find talking about Roth IRA’s boring. Nevertheless, they are an unbelievable way to amass great wealth. To minimze the disomfort of talking about the subject, I’m going to give you the Cliff Notes Version.

INVEST IN A ROTH IRA

Background; I’m one of those finance nerds who started investing in my 20′s and have not stopped. I was decades younger than the other attendees at my first retirement investing seminar. When a way to invest and save taxes came up, I dove in! Thus, as soon as self directed IRAs became accessible, I started contributing the max. When I met El Carino in my mid-20′s, after just a few months of dating, I got him to contribute to an IRA as well.

This article will tell you why you must contribute to a Roth IRA and how to do it.

WHAT IS A ROTH IRA?

According to Money Chimp a Roth IRA is a tax advantaged investment vehicle which allows your money to grow over the long term and only get taxed one time! You put money in an investment account after taxes, invest it in your preferred investments, and pay zero taxes as the money grows and zero taxes when you take the funds out!

That’s correct, you pay no taxes at retirement when you withdraw the funds.

HOW MUCH COULD YOU EARN?

Assumptions:

Put $5,000.00 in an investment account once every year from ages 25 to 65.

Invest in 3 funds:

40% in Vanguard Total Stock Market Index Fund (VTWMX)

40% in Vanguard FTSE All World ex-US Index Fund (VFWIX)

20% in Vanguard Total Bond Market Index (VBMFX)

Earn an average return of 7% over 40 years.

At age 65 your investment account will be worth $998,175.56

When you withdraw the funds, you pay zero taxes.

HOW TO SET UP A ROTH IRA?

Contact a discount broker such as Vanguard, Fidelity, Charles Schwab, Etrade, or other.

Either on line or by phone, follow the required steps to set up the account.

Transfer money into the account either directly from your bank account, paycheck, or mail a check (very old school).

Choose the funds and indicate your preferred percentage for each one. Instruct the brokerage to transfer this money and future contributions into your funds.

WHAT IF I DON’T HAVE $5,000.00 PER YEAR TO INVEST?

No worries. Invest any amount you can. Start now, and set up an automatic transfer every month. Increase the amount as your income grows. Check out an online calculator to find out how quickly even small amounts can grow into large sums over time.

Barb Recommends

Holding Cash is Not a Sin at Morningstar.com by Liana Madura.Even big time fund managers hold cash in their portfolios. It may be your best move on occasion.

How Much Money is Actually Enough in More Magazine is one of those articles that really inspired me. It changed my perspective and allowed me to loosen some of my negative money thoughts. Read it to be uplifted.

Wealth Informatics asks, Is Gift Giving a Waste of Money? My charity contributions are automated quarterly through Charity Navigator. No muss, no fuss. What do you think of Wealth Informatics approach?

This is a recommend as well as an article where I’m mentioned ; Best Tips for Fixing Your Finances, by Donna Freedman over at MSN Money. This article is jam packed with stellar personal finance recommendations from the best money minds on line. If you are looking to learn more about money, you’re certain to find a resource here.

Priorities by Jason, at Live Real Now got me thinking about my own. This article reminded me that the difference between success and failure is putting limited time towards the most important tasks. While you’re there, don’t forget to enter his 2nd year GIVEAWAY.

The Three Stages of Financial Freedom at Invest it Wisely, also got me thinking. Let this article prompt you to consider what financial freedom means in your life.

The Reasons I Like Money Over Gift Cards at Money Reasons. This article echoes the belief of Clark Howard renowned saving guru. Give money and you can be sure it will not go unused.

20s Money writes about why the Outlook is Not Good for 20 Somethings. As a worrier, I tend to get fraught with concern about future generations. This thoughtful article talks about the perils ahead for the Gen Yers.

The 30K Online Challange at 20s Finances drops down the gauntlet for others to participate in this money making competition. Are you a blogger motivated by competition? If so, why not join in?

 Barb Across the Blogosphere

FindtheBest published,  Should You Buy Investment Products at Your Consumer Bank?

Free Money Finance published Dividend Investing is Not the Perfect Solution for Investing

Benzinga Brain Trust Column, Are IPOs worth the Risk?

Emily from Creditcards.com mentioned my Pro Shopping article

Carnival of Personal Finance, at Afford Anything, promoted my Shopping Video.

Totally Money Blog Carnival at BankNerd, published How to Get Rid of Debt; Start Here.

What type of retirement accounts are you using? What asset allocation do you prefer?

image credit; newsusacontent

VIDEO SERIES; Part 2

News Flash; I’m nominated for a Plutus Award in the Best New Ebook Category for my ebook 20 Minute Guide to Personal Finance (download for free on the right)!! Please vote for me here!

Welcome to Part 2 of my video series. In Part 1, I talked about how I went from a scared girl to a confident and successful adult. The video I showcased was a first attempt project with hints for Holiday shopping. The tips work well for any season. And the article championed getting started now!

Todays video, dedicated to those just starting out, lays out money ideas for the 20-somethings and smart money reminders for the more established.

“Never spend your money before you have earned it.” Thomas Jefferson

Follow Jefferson’s advice, add in a bit of saving, and you are on the right path. Watch the video, consider the tips, pass them along to your friends, and help them become money smart!

Money doesn’t have to be complicated. Develop consistent habits, don’t spend what you don’t have, be patient, and your money will grow. And don’t forget to create additional income streams to grow your wealth.

• This is part 2 of a series showcasing my YouTube Videos. Learn personal finance and life skills from these instructional videos. Make sure to check out Part 1; Achieve Your Perfect Life With Goal Setting.

Check out these websites dedicated to those just starting out:

• The College Investor
• Financial Success for Young Adults
• Young and Thrifty
• Thousandaire

What money advice do you wish you knew when you were starting out?

“Cash confiscates capital. Long term, after taxes and inflation, the return on cash is negative.” Catherine Keating

Since my mid-20’s, I made financial net worth goals for our family. I’d calculate our current net worth, add additional savings, and punch in an expected rate of return over the period, usually five to ten years. Occasionally, I go back and review prior goals. No matter what the market, over the long term we have met or surpassed the objectives.

Learn how long it takes to meet or surpass your financial goals.

Assumptions:

• Save monthly.
• Divide Savings among STOCK (60%) and BOND (40%) investments. The historical average annual return of 60% stock funds and 40% bond funds is 7.4%. To be on the conservative side, I’m going to assume an annual return for this portfolio of 7%.
• Investment returns over the next 20-40 years approximate historical averages; STOCKS 9% BONDS 5%

HOW LONG WILL IT TAKE?

At an annual return of 7% per year, how long until you are wealthy?

If you save $100 per month, in 40 years you will have $242,481.00. Increase that to $800.00 per month and you’ve got over 2 million dollars after 40 years investing.

Drop your monthly investment to $500.00 and invest for 30 years. You still wind up with a nest egg of over $600,000.00. Not bad.

Empowerment-It’s in your Hands

There are no guarantees in life-but regular savings and investing will DEFINITELY make you wealthier than SPENDING!

Finding the balance between spending and saving leads to pleasure now and future security.

LEARN ABOUT INVESTING

Download my free eBook from the form on the top right of the site. It’s not hard and will get you started to prosperity.

Barbara Friedberg Personal Financeteaches WEALTH BUILDING SKILLS. Pay attention, be patient, don’t overspend on stuff that doesn’t last; save, invest, and you can become rich. Take action to hit your wealth target.

“You can never be too rich or too thin.” Wallis Simpson

Whether you believe this quote or not, most of us wouldn’t mind losing a few pounds or accumulating a few more bucks.

I USED TO BE FAT

When I was an adolescent, I ate too much and was fat. Eventually, with some help, I took the weight off and have kept it off for many years. The principles for long term weight loss and wealth generation have some similarities.

Develop “thin” habits and maintain a healthy weight.

Practice smart money management habits and get rich!

This stuff is not rocket science, and it’s not even too hard (except in the beginning). Now, I don’t believe the adage that it takes 21 days to develop a habit. I think it takes much longer. But the great thing about habits is the more you practice, the easier they are to maintain.

So, I’m going to walk you through 3 habits, that if practiced over time, will lead to a trimmer weight and a fatter wallet!

TIP 1: INCREASE ACTIVITY

Build movement into your life. Whenever possible move. In fact, get up right now, stretch, twist and move around.

Park your car far far from the store entrance when shopping, or better yet, walk to the store. Make extra trips up and down the stairs whenever possible. Do the dishes, mop the floor, and dust, you will burn calories.

Cut your snack in small sections. Take only one section to the table. After you finished the section, get up, walk around, and do something else. You may not even want the other sections. And if you decide to eat the next section, you’ll have gotten a bit of exercise in the meantime.  Barb’s note; distraction may be the most underrated weight loss trick there is!

Keep a log of how active you are for a few days, and see if you can beat your record!

The key to making this tip work is to make sure you don’t increase your calorie intake!

 TIP 2: MAKE INVESTING AUTOMATIC

This tip is the cornerstone of Richard Thaler’s brilliant book Nudge. Thaler recommends putting systems in place to help you automatically make beneficial choices.

Transfer money out of your paycheck and into an investment account each month. Start with your workplace retirement account, and then have more transferred into an investment account when you can.

The first month or two, you will miss the money. Over time, I promise, you get used to living on what goes into your checking account and will not notice the additional transfers.

I look back at the workplace retirement accounts El Carino and I started at our first jobs and I am amazed at their growth. When I left my former employers, I never took the money out and it has since grown for many years. In fact, time is the most important factor in wealth generation, so start this habit now.

TIP 3: SPEND SMART

You can make lots of money through saving and smart investing, but if you spend it all, you’re right where you started-poor! 

Ramit Sethi has implied that cutting out the small stuff may not be worthwhile.

I disagree.

Consider this, save $5.00 per day for 5 years and invest in a stock market index fund or ETF (exchange traded fund). Assume you earn the historical market reurn of 9%.

At the end of 5 years you have $11,522.34.

For the cost of a pack of cigarettes, a sandwich, a magazine, a fancy latte, or a couple of lottery tickets you could have more than $11,000.00 at the end of 5 years.

Continue this $5.00 per day savings for 30 years. At the end of 30 years you have $281,349.71. Now almost $300,000.00 is nothing to ignore!

How realistic is this?

Most of us can find $5.00 per day to cut.

The key to creating this habit is to funnel money into an investment account through thick and thin.

Small amounts add up!

ACTION STEPS:

 Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

•  Jot down one habit you want to develop.
• Keep the note visible.
• Look at it and note your progress.
• Reward yourself after a couple of days!
• Write and let me know how it is working out!

For a quick overview of Investing Strategies, pick up my FREE eBook; 20 Minute Guide to Investing (top right of the page). If you like what you’re reading, sign up for my RSS feed or email subscription and follow me on twitter so you get the word immediately. 

What is your tip for getting rich and thin?

image credit; gaymay

BARB RECOMMENDS LINK ROUND UP!

WIN MONEY AND INCREASE FINANCIAL SMARTS:  $50 in gift cards from AMAZON in BOOST FINANCIAL LITERACY; MARCH CONTEST TELL YOUR FRIENDS! 

WHEN YOU’RE DONE HERE-Stop by my Featured blogger article, Want to Get Rich from the Lottery? Start a Savings Plan Instead, at Making Money Blog; American Media Marketplace,  

MAIN TOPIC: Imagine the Unimaginable

Last night, while watching the George Clooney, Up in the Air movie for the second time, I was transported back to the financial and economic pain of 2008. Real life, laid off employees were the characters in the “You’re fired” scenes. Their responses were heart wrenching.

“Who will pay my mortgage and bills?”

“What am I going to tell my kids and my family?”

“I’m 60 years old, how will I ever get another job?”

“I’m making $90,000 now; what’s unemployment, $250 a week?”

If you knew you were getting fired this year, what would you do differently?

PRACTICAL APPLICATION: Do You Know the Future?

Many give their financial future not much more than a passing thought. After all, with the kids, the jobs, the bills, who wants to consider the “what ifs”? Yet, taking a bit of time now, to plan for financial set backs, will minimize one possible lifetime stress; the possibility that a layoff or major bill could put you in the poor house.

My mom is the master of plan B (and plan C). She has a contingency plan for everything. As a result, she and my dad have always lived way beneath their means. I’m fortunate to have learned that habit early in life. Here’s how you can learn to be prepared for any financial surprise.

Plan B Steps:

1. Face reality, that there will be unexpected expenses. They may be small, or they may be huge. Ask yourself if it is worth spending a bit less now in order to have the confidence that you’ll be able to handle financial setbacks later?
2. Practice mindful spending. Before you spend anything, pause and ask yourself, ”Is this expense worth sacrificing money in the bank for financial emergencies?”  You may think this is silly, but when you’re driving the kids to their after school activities, bring a snack, don’t spend $10 every day to get snacks at the fast food joint. Save $10 per day for 350 days and at 1% interest, you have $3,532.00. Small amounts add up!
3. Transfer part of your paycheck to a savings account designated for emergencies. This is on top of any money going in to retirement savings. Use this money only for large emergencies, like a $1,000 car repair bill or a layoff. Build the value up to six to nine months of living expenses.
4. Get in the habit of living beneath your means. The pleasure of a discretionary purchase is far less than the pain of a major financial setback.

ACTION STEP:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it for all of your personal finance goals, thoughts, activities, and plans.

• For this week, write down every expense you make.
• At the end of the week review. Come up with lower cost substitutes for your spending.
• Cut out the spending that is not giving you enough pleasure, reward, or satisfaction for your dollars.

How have you handled your financial setbacks?

Barb Recommends and Featured Personal Finance Carnivals:

• Tim at Faith and Finance has a good post, causing you to think! I like it; Dangers of Dave Ramsey’s Investment Advice.
• COUPLE MONEY BLOG EXTREME GIVEAWAY-Netbook plus other great prizes! I’m donating to this awesome event!
• Enter to win a $100 gift card to Walgreens at The Saved Quarter. Who doesn’t need personal care products?
• Moneyning outlined a comprehensive, bullet point list of money “do’s” in 20 Top Personal Finance Tips to Teach Your Kids (and Yourself). Pass this one around!
• Frugalentrepreneur hit a cord when he talked about coping with the burn-out that accompanies juggling multiple streams of income. Quality analysis and suggestions.
• Money Mamba wrote an article about Why Monopoly Games Last Forever and did an amazing job relating it to real life money lessons. You must read this smart post about my all time favorite game.
• Krantcents wrote If Not Now, When? Get inspired to pursue your dreams, the motivation is in this post!
• Everyday Tips talks about some unexpected medical expenses and the benefits of diversification. As usual it’s an engaging read!
• GenX Finance writes, There is More to Risk Than Meets the Eye. Very clear cut article describing the types of risks to watch out for when investing!
• Do Not Wait-Retirement Investing Q & A; Succinct and helpful article about the retirement basics.
• Putting Food on the Table When You Can’t Make Ends Meet lists real life resources for those down on their luck. Circulate this instructive article from the Simple Dollar.
• Money is the Root has a thought provoking piece on HOME OWNERSHIP!
• Yakezie Carnival – Millionaire Nurse Blog
• Carnival of Personal Finance – Magical Penny

image credit: Flickr Creative Commons

 20 Minute Guide to Investing is NOW AVAILABLE! If you have any interest in learning about investing, either now or later, you must download this FREE eBook!

Article first published in April, 2010

“What is important for kids to learn is that no matter how much money they have, earn, win, or inherit, they need to know how to spend it, how to save it, and how to give it to others in need. This is what handling money is about, and this is why we give kids an allowance.”
Barbara Coloroso

Investing sounds exciting and glamorous. At the start of my investing career, I thought it was so cool to research investments and invest in the stock and bond markets; UNTIL I HAD MY FIRST LOSS. When I saw my first stock pick drop 50% in price, I WAS NOT HAVING FUN!

Investing is not a game, but an important activity to facilitate the accumulation of wealth. In the short run, investing is also an activity which can facilitate losing wealth.

Barbara Coloroso’s advice to kids holds equally true for ADULTS. For that reason, this list tells you in plain English what to do before you even think about investing* and why.

MAIN TOPIC; Step by Step

1. Open a bank checking account-You need this account for your monthly expenses. Internet or bricks-and-mortar banks are ok.

2. Open a bank savings account-This is where you keep all of your short term savings. Build your emergency fund in the savings account. Internet or bricks-and-mortar banks are ok.

3. Write down your income and expenses for a month-I know this is a pain in the —–. You MUST do this to be in control of your cash. There is no way out! Start with a small notebook or day calendar. Pledge to do it ONLY one day first. After the first day, continue; one day at a time.

4. Make a budget or spending plan-I know this one is painful too; but do it anyway. Find one that works for you. Once you find out where your money is going, you can decide if you are getting enough pleasure from your spending.

5. Follow the spending plan-Do the best you can, you don’t need to be perfect. Adjust along the way. Maybe when you go out for drinks, you’ll decide a beer is as much fun as a martini, and more than half the cost.

6. Pay off all credit card debt-You cannot move forward financially with credit card debt.

7. Transfer a specific amount regularly into the savings account-Don’t worry about the amount in the beginning. Just develop the saving HABIT. The easiest way is to complete a transfer form (from paycheck to bank) at your work HR office. 

8. Save enough in the savings account to equal 6-8 months living expenses- Allocate this savings for unexpected emergencies and replenish after using.

9. Buy inexpensive TERM life insurance if you have someone (spouse &/or kids) depending on your income-Term insurance doesn’t cost much and if you die, your family/spouse do not end up in the poor house. 

10. Enjoy LIFE and the PROCESS OF LIVING! After all, you’re not doing all this planning to have a miserable life or ONLY for some far reaching goal.

 You must live and have fun along the way.

 *Caveat: If your employer matches your contribution to a retirement plan, then contribute enough to get the employer match. If you don’t contribute, you are throwing away free money.

ACTION STEPS:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it for all of your personal finance goals, thoughts, activities, and plans.

1. Choose one step to take today.

2. Complete one step per week. Enlist a friend and complete the steps together; it will motivate you to continue.

 YAKEZIE PERSONAL FINANCE BLOGS

Yakezie is the premier personal finance network on-line with over 100 talented members. Our mission is to selflessly help others. Stop by our dedicated website to meet our members, learn about our scholarship opportunities, and read compelling content. 

I Feel Lucky; Gambling as a Road to Wealth

EXCITING NEWS: I was selected to deliver a national training in San Francisco this November entitled: Personal Finance Solutions for Busy Mental Health Professionals. This 3 hour workshop includes material from my upcoming eBook about Investing. Stay tuned to get first crack at the NEW EBOOK; and it’s FREE to my readers.

This article is the 4^th  in a series relating poor money behaviors with stress. The topics are inspired by an article entitled Emotions, Money, & Financial Stress by Nancy Losinno, published at the US Department of Energy, Brookhaven National Laboratory website.

Why not read the whole series?

Part 1: GO SHOPPING to solve your problems?

Part 2: Overcome a Passion for Procrastination (in dealing with financial matters)

Part 3: Money & Relationships-Make it Work!

“Here’s something to think about: How come you never see a headline like ‘Psychic Wins Lottery’?” Jay Leno

 Is this an indictment on psychics or the lottery? I’m not certain, but either way winning the lottery is highly unlikely.

MAIN TOPIC: Can you Believe this Guy?

Last week a well dressed business man pulled up a chair, laid down his laptop, and proceeded to the counter to pick up his coffee. As he walked into the shop, I marveled once again at the number of virtual office workers who congregate at the coffee shop.

 Wow, was I surprised when the man laid out his “work.” He had about 10 lottery tickets which he began scraping with a small tool. This time I forced myself to KEEP MY MOUTH SHUT! 

 Here’s what went through my mind:

 “Oh my G-d. Doesn’t this guy know that he is flushing his money down the toilet? Didn’t anyone tell him the odds of winning anything significant is at least 1 in a million? He should take the amount he regularly wastes on the lottery and put it in a broad based index mutual fund like the Vanguard Total World Stock Index! ……… I really want to talk to him, but I know it is none of my business.”

This is one of my biggest financial pet peeves; trying to WIN YOUR WAY TO WEALTH. Unfortunately, this stranger is not the only one I know with this mindset. Several family members share this distorted money-making attitude. It’s the demonstration of trying to GET RICH QUICK. It is very very unlikely! The lottery ticket buyers are frequently those individuals who carry large credit card balances, and collect the latest gadgets (even when they can’t afford them).

 These individuals are missing a key SUCCESS STRATEGY: the ability to DELAY GRATIFICATION.

 PRACTICAL APPLICATION: Get Rid of Toxic Thinking

Any sort of gambling will not lead to wealth; not lotteries, black jack, roulette, poker etc. The odds are IN FAVOR OF THE HOUSE.

If you even consider gambling or playing the lottery in the hopes of “STRIKING IT RICH,” ADJUST YOUR THINKING NOW.

 As Losinno said, “The reality is that most of us will have to work until we get to retire, and only a tiny percentage of people ever win lotteries.  It’s far better to use your wits to plan soundly towards making your retirement dream comfortable.  You’ll probably come out ahead anyway, by being a tortoise rather than the hare, since most Lotto winners have lost their winnings within the first five years.” 

Old thinking: Buy lottery tickets to get rich!

New thinking: There is no such thing as a free ticket to wealth. I have to plan, save, and invest in order to gain wealth. It’s not easy, but if I take it step-by-step, it’s possible. Delaying Gratification leads to financial success.

 ACTION STEPS:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

1. Go to the human resources (HR) office at work to set up an automatic withdrawal from your paycheck into a savings account. If it’s taken out immediately, you will not miss the cash.
2. While you are at the HR office inquire about a savings plan &/or 401(K). Don’t get scared if you don’t understand the program, ask the human resources staff to help you. It’s their job!
3. Pick up my RSS feed (the big orange striped button on the top right) and read BarbaraFriedbergPersonalFinance regularly to learn how to achieve wealth.

RECENT PERSONAL FINANCE CARNIVALS

I am honored to have my work showcased at these sites recently. Why not stop by the CARNIVALS and check out the fine articles?  

The Carnival of Personal Finance at Miss Thrifty featured my article, 3 Amazing Career Tips

The Carnival of Money Stories 2 at Simply Forties ran How Daniel Makes Extra Money and you can too.

Originally published on March 21, 2010

“Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”
Peter Lynch   

One of the greatest investors of our time attests to the simplicity of investing in the stock market. Read this post and find out why. Following is the “Cliff Notes” version of why you need to put part of your long term investment dollars in the stock market. 

Main Topic; Stocks  

The historical long term growth of American business is amazing. American business is frequently represented by the Standard and Poor’s 500 Stock Index (S & P 500). This index of 500 stocks is considered a barometer for the complete US Stock Market. 

Forget about the recent recession and downfall of the stock markets for a minute and take a peak at some historical returns of the S & P 500. Although historical returns do not guarantee future returns, take a look anyhow. When looking at these returns, think about the stock market as a collection of U.S. businesses, not mutual fund or brokerage account statements. Then ask yourself if you think U.S. businesses and the economy will grow over the next 20, 30, or 40 years?

The first time I really studied this type of data was in 1993.  Although I had been investing for a while prior to that time, my husband was still skeptical. I wanted to convince my husband of the importance of putting money into the stock market so I prepared some data for him. Fortunately, for us he was convinced by the historical information, so we boosted our investing at that time and have watched our investments grow over time while continuing to contribute regularly to our investment accounts. 

 But what does this return mean in real dollars? 

Consider this, if you are in your 20’s, 30’s, or 40’s you have many years until retirement. You can stick some money in a brokerage account at one of the discount brokers (like Fidelity, Vanguard, Schwab, or  TD Ameritrade), invest that money in an S & P Index mutual fund or ETF and forget about it. Fast forward 20, 30, or 40 years, it is highly likely that your investment will have grown substantially! Even Rumplestilskin could try this and probably wake up a rich guy after sleeping for a really long time! 

Certainly, it is better to INVEST REGULARLY and not just one time! 

Now, I don’t recommend that you run out and stick the money into the account tomorrow unless you have a bit more financial knowledge. Continue to read BarbaraFriedbergPersonalFinance and before you know it you will have the skills to grow your net worth. 

Practical Application; How do I Proceed?     

• Here is the takeaway from this post: 
• The more time you have, the greater chance you have to get wealthy. 
• Over time, the stock market has been a wonderful way to accumulate wealth. 
• Since the stock market is very volatile, only put money into the market that you can leave there for 5 years or more. 
• Invest only in stock index mutual funds or exchange traded funds (ETF’s) unless you have a lot of money and want to devote hours per week to researching individual stocks. 
• For the best low effort long term returns, AUTOMATE! Have a regular amount automatically transferred in to a brokerage account each month from your paycheck or bank account.    

Action Step: 

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans. 

Grow your emergency savings to 6 months of living expenses in a bank savings account or money market fund by transferring automatically from your paycheck or checking account to a savings account. 

CAUTION: This post if for educational purposes and is not advice to run out and buy a stock mutual fund! Before investing, it is really really important to gain some basic financial education. And before sticking any money in investments you need to have savings for emergencies and no consumer debt! Think of this post as part of your lessons in “financial literacy.” Read this blog regularly, try out the action steps, and learn the basics before you start investing. Keep reading and become financially smart!

How has the recent stock market volatility affected your investing activity?