Investing 101

Learn how you can make money in today's financial markets

Every Once In A While You Have An “Aha!” Moment, a point in time when the light bulb in your head comes on and you experience a revelation. Kym Jefferies had such an epiphany when she got a divorce some years back. She wanted a “quick, painless divorce that cost only $500,” says Jefferies, 36. The divorce fee was, indeed, minimal, but the $10,000 debt she was saddled with after the settlement rocked her.

Jefferies admits that it was an uphill battle trying to pay off the debt–mostly credit cards in her name–that her ex-husband helped to create. But she made sacrifices to rid herself of the debt. She says divorce has a way of clearing your head; slammed with a massive debt, she realized it was time to “play grown up,” and her finances were a good place to start. Now, she is debt-free and investing her extra cash regularly.

Investing is not just for rich folks. Investing is for anyone who wants to see his or her money make money. This guide takes the guesswork out of how to get started. In Part 1 of this series on Investing, we’ll show you how to get into the stock market, gain knowledge, and understand the process.

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When Jefferies started investing at age 22, she was earning only $13,500 as a mortgage claims processor. “I worked there for two years and invested the minimum, around 1% to 3% [of my salary],” says the single mother. Now, she puts away $200 per month in her current company’s 401(k); her investment is worth $13,000. She still invests the minimum–3% to 5%–reasoning, “depending on your age, you can invest close to the minimum,” because time is on your side. Using that logic, she borrowed $3,000 from her account 10 years ago, which slowed her 401(k)’s growth. Now a senior accountant at Westcon Group Inc., a distributor of connectivity devices, Jefferies says she will be talking to an advisor about investing outside of her 401(k). Recently she began saving for 9-year-old daughter Bria’s college education by investing $50 each paycheck in a Galaxy fund through Fleet Bank.

Regardless of how much you invest, the point is to start now. According to the 2001 Ariel Mutual Funds/Charles Schwab & Co. Inc. Black Investor Survey: Saving and Investing Among High Income African American and White Americans, African Americans are almost twice as likely to invest when their income increases from $75,000 to $100,000, while whites invest at similar percentages at either of those incomes levels.

Says Mellody Hobson, president of Ariel Capital Management Inc./Ariel Mutual Funds (No. 3 on the BE ASSET MANAGERS list with $5.2 billion assets under management), in Chicago, “If people put off investing by saying, ‘I’m waiting to know everything I can [and to make more money],’ they’ll never get there and they will have squandered a wonderful wealth-building opportunity.”

To get started, inquire about your company’s employer-sponsored plan. Contributions are pretax, you choose the investments, and it’s professionally managed. Some employers even

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