Guides To Self Improvement

The new year usually begins with a hangover, but after that we have resolutions we attempt to accomplish. Some people do go through with what they have set out to do, but most find themselves right back to what they were doing before. Let’s see, some of the common resolutions are diet, exercise, and stop smoking-this last one should have an asterik next to it. You should stop smoking cigarettes, so that in 6 months time after your palate is clean and your addiction is gone you can then start enjoying cigars, more on this in other posts. With that out of the way, let’s get to a resolution that gets overlooked for too many people, investing money in the new year.

Investing money, can mean different things to different people. When I say “investing money”, some might think of adding to your 401 k, others will think of opening up a savings account. Investing money is a strategy that should be taken as seriously as running your own business. Below I’m going to out line how to start investing money.

1. 401 k Plan Retirement

Make sure you are contributing to this, if your employer offers it. If not, then open up a roth IRA with any number of brokerage houses such as t rowe price or merril lynch on line. Alternatively, you could go with a cheaper version of the two, scottrade.com . Investing in a 401 k is basically investing in mutual funds, but with the added benefit of having your employer contribute (free money) to your account. In the end, and I can’t stress this enough, if your company offers a 401 k and you are not taking advantage of it, you are committing the biggest money investment mistake of your life.
2. Investing money in mutual funds

Mutual funds are a great way for lazy investors to make a decent amount of money on their money. As I mentioned above, when you invest, keep in mind that simply because you are investing money into a mutual fund doesn’t gurantee that you will make money. If don’t want the hassle of figuring out where to invest your money, do this; call your broker and tell him you want to put your money into a blue chip index fund and forget about it.
3. Day Trading Stock Online

If your entire porfolio was $100k, I would use no more than $5k for day trading. Actually, what I do is not really day trading , but short term trading. I look around for a stock that has some momentum behind it and invest a month or so before earnings come out. Usually I try to gauge the mood behind the stock, it has so far worked well for me. Although, I only use about $2k for this type of speculation. I say speculation, becuase when you are dealing with stocks in the $1-$2 dollar range, there is literally no rhyme or reason to the company and it is usually in bad financial shape. The hope with these stocks is that enough people think they can make money on a short rise and therefore money gets pumped into it and volume goes up and more people invest, so the price goes up. Watch out though when everyone takes their profit, it will sink 50% in a weeks time. With short term investing, you have to have discipline to take your profit or loss and run. I usually set it at 20 % either way.
Other thoughts:

If you browse through websites dedicated to investing everybody says you should invest money according to your age. The older you get the more conservative you should invest. To me, this really only works for the non-investment thinking person. Why is that? Because it’s not really about age, but about personality. If you are the type of person that looks at their 401k account everyday and starts sweating the moment it goes south, then you need to invest conservatively all your life, not just when your old.

Investing money for the New Year, you should also think about emergency savings account.