Primer for first-time investors

I am interested in investing but I don’t know where to start. I’ve read many articles in black enterprise and have searched the Internet. However, most articles basically target professionals and executive types. I’m a thirty-something hard-working individual who unfortunately doesn’t have thousands of dollars in the bank to invest on a whim. I would like to retire comfortably. I’d like to learn the basics without being confused by the terms.
Eve Shawn, BE Bulletin Board

BE: We often get this kind of question in letters and e-mail from people who have the desire to be in the market but don’t know where to begin. So we feel duty-bound to give you the beginner’s tour.

There are some basic steps you should take before you start to invest. They are: find a financial advisor; reduce or manage your debt; research financial terms; and identify where you should invest.

The first thing you should do is find a financial planner to assess your needs and determine how much you can invest in the market based on your current salary. You can find a list of African American planners in your area by logging on to TheBlackInvestor site at www.theblackinvestor.com, or search a broader list by visiting www.iafp.org, the Website for the International Association for Financial Planning.

Before you start putting your extra cash into the market, however, you should do some research on financial terms. You can log on to www.investorwords.com, which contains a comprehensive glossary that defines many of the concepts people on Wall Street use (see “When P/E Ratios Just Won’t Cut It,” Moneywise, August 1999).

Now, say you’re ready to invest in the market. Rather than going out and buying individual stocks, the best and most cost-effective way for most beginners is to buy mutual funds. We recommend purchasing no-load funds (see “The Right Fund at the Right Price,” Moneywise, July 1999). Overall, they’re cheaper than load funds, so called because they charge a broker’s sales fee, or load. No-loads do have some fees, however.

Again, your financial planner can help you determine which funds you should invest in, so choose one you feel comfortable with.

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