Don't get stuck in financial gridlock. By learning the basics, you can steer your finances onto the road to prosperity. .

and may grow to $10 trillion over the next few years. But what makes these vehicles so inviting to the lay investor like you is that they offer a range of funds to suit your investment philosophy, sector preference and risk tolerance level.

  • Look for a way to invest on the cheap. To avoid paying broker fees, you can buy high-quality equities through direct stock purchase plans (DSPs) or dividend reinvestment plans (DRIPs), in which you buy stocks directly from a public company. You can buy into some DSPs and DRIPs on the Internet (“Direct Investing,” August 1999). DSPs usually require a minimum investment of $250, but some companies waive the lump-sum fee if you use their automatic debit process. Through these plans, you can buy stock for as little as $50 a month. You can access DSPs through Netstock Direct at In terms of buying affordable mutual funds, look for no-loads-funds that you can buy directly from the company and avoid upfront sales charges that typically range from 4% to 8%.
  • Beginning a full-fledged investment program will take discipline and dedication. Learn the basics and place your hard-earned
    dollars in a range of investments gradually. By doing so, you will stay focused on the road ahead and avoid obstacles that may cause costly accidents.

    STEP 1
    How To Build Your Asset Allocation Model
    Determine the classes in which to invest
    Cash Equivalents

    STEP 2
    Determine how much money to invest in each class
    Cash Equivalents-Z%

    STEP 3
    Determine the specific securities in each class into which money will be invested, given the investor’s objectives
    Microsoft Common
    Con Ed Preferred
    Coca Cola Common
    Johnson & Johnson Common

    Treasury Bonds
    RTP Industrial Development
    AT&T Bonds
    St. Joe Paper Co.

    Cash Equivalents-Z%
    Money Markets
    Certificates of Deposit

    STEP 4
    Determine the amount of money to be invested in each specific security
    Microsoft Common X1%
    Con Ed Preferred X2%
    Coca Cola Common X3%
    Johnson & Johnson Common X4%

    Treasury Bonds Y1%
    RTP Industrial Development Y2%
    AT&T Bonds Y3%
    St. Joe Paper Co. Y4%

    Cash Equivalents-Z%
    T-Bills Z1%
    Money Markets Z2%
    Certificates of Deposit Z3%

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