I'm ready to start investing. What's the first step?
Don't go near a broker or commissioned planner if you've just come into a lot of money (an inheritance, an insurance settlement, a lump sum retirement payout) and don't know what to do with it.
Clients with loose cash and weak convictions are fresh meat, ready for roasting. A self-interested planner may urge you to buy high-commission investments that serve his or her objectives better than yours.
Because you don't know much about investing, you won't know what's going on. Before you set foot in the office of a stockbroker, insurance agent, or financial planner, learn the basics yourself. Sock your money into bank certificates of deposit or a money market fund, then study up. Read books. Work out your priorities. Take all the time you need to understand the tried-and-true principles of successful investing. Six months, one year, the wait doesn't matter. During that time, your money will quietly earn interest with no risk of loss and no risk of slipping into bad hands. The only expert that a novice can safely visit is a certified public accountant, for tax advice. That is, provided that the accountant doesn't sell financial products.
When you're ready to launch, try investing yourself, a little in this mutual fund, a little in that one. Give it a year, see how it feels, and then invest some more. Don't worry about "missing the market." There's a new market every day. Once you've had some experience, you might discover you like it and keep going. Or you might decide that you want professional advice.
Excerpted from Making the Most of Your Money Now by Jane Bryant Quinn
Copyright 1991, 1997, 2009, by Berrybrook Publishing, Inc. Reprinted by permission of Simon & Schuster, IncBuy the Book