Investment Advice for the Beginner and the Pro

One of the most important aspects of money management is making investments. Yet, the majority of Americans do not take advantage of this money making opportunity. If you are someone who is scared off when hearing the word "invest" because you aren't sure how to go about doing it, here are a few simple things you can do to get moving in the right direction.

Set Up a Schedule

First, go out there and set up a mutual fund. Then, set up a regular schedule on which you send money to that fund. You can join a program such as T. Rowe Price's Automatic Asset Builder, make a $2,500 minimum contribution to get started, and then contribute as little as $50 every month toward your mutual funds every month. Before you know it, you will have a nice little nest egg built up.

Take Some Risks

Sometimes, you can really earn some big money on risky investments. At the same time, you don't want to lose your entire savings on a hunch or on a hot tip you get about a certain stock. So, go ahead and set aside 5-10% of your portfolio for those risky investments. You never know what it might bring you and, at the same time, you won't be putting your entire portfolio at risk.

Diversify

It is best to keep your investment portfolio diversified. This includes owning some foreign stock, at least 20% of your portfolio should come from overseas investments. By doing so, you will reduce your overall risk and you will have a better chance at having high returns. You can start off by getting a piece of American Century International for bonds and Artisan International for stocks.

Purchase Quality Stocks and Inexpensive Funds

There are a number of quality stocks available out there that pretty much guarantee a solid return, such as Home Depot, Wal-Mart, and Kohl's. So, be certain to take advantage of these quality stocks and include stocks such as these in your portfolio. At the same time, look for mutual funds that are not expensive. Look for stock funds that are below 1.33% and bond funds below 0.89%. Studies have repeatedly shown that keeping your investment costs low gives you a better chance of getting a high return. Large cap-growth stocks should also be included in your portfolio.

Rebalance on an Annual Basis

Once per year, you need to take the time to rebalance your portfolio. During this annual rebalance time, sell your investments that are high and buy low. Or, simply put your cash into a fund that does the allocating for you, such as through Fidelity's Freedom Funds.

By thinking smart about the investments you are making and keeping track of your portfolio, you will increase the gains your investments receive. So, stop thinking about it and get out there and start investing - you will be thrilled with the results.