Saturday, January 28, 2012

Easy Investments for Beginners (or Lazy People)

I'll tell you right out: I am NOT interested in playing the stock market. I don't have the nerves for it. I don't have the math skills to enjoy it. I don't have the money to have it really pay off. And I SURE as heck don't have the time.

However, one of my goals on the 101 things in 1001 days list is to invest in the stock market. I know it's good for my future to beat the inflation rate, at least. But where do I start with only a small amount to invest? How do I know what stocks to pick? How do I know when to buy more of something that's going to be the next Microsoft, or sell that Bear Stearns look-alike (I had to look that up, but it's not pretty) before it takes a dive? And what if I get it wrong? What if I get it RIGHT, even? What is that going to cost me in fees and in time?

So I tried a couple of investing baby steps. I opened a ShareBuilder account through ING Direct (and I got a $50 bonus for doing so -- if you're already banking with ING Direct, check the website for specials like that one). I picked just one stock (one I knew a little bit about because I used to work for the company), took an amount of money I could afford to lose, and bought a small number of shares. Then I watched it for a month. I watched it fall, actually. Since mid-December when I bought in, the stock has dropped 13 cents per share. I've lost nearly 12 percent of my initial investment. That sucks, right? Well, it was money I accepted that I could lose, after all, and the 50 bucks more than offsets the loss in the market. And I learned about how ShareBuilder works -- it has a pretty thorough Help Center with explanations of basic topics like "How do I place a trade?" and "How do I connect to my ING Direct account?" as well as a section to provide help selecting investments -- for free! There are actually lots of options for trading stocks and bonds, so this could be one road for the beginner investor.

I had a much better experience over at Betterment, though. I like playing with their user interface, honestly -- lots of buttons and dials and sliders. (Yeah, sometimes I take off my user design hat and play in the ball pit.) It was SIMPLE, which is what I needed. Yes, it's the stock market, but it's not complicated or confusing. Here's why: I transferred money over and answered some basic risk-tolerance questions (how long until I plan to retire, what my goal amounts are), and the Betterment system recommended a ratio of stocks and bonds, and then INVESTED FOR ME. I can look at the specific companies that were picked, and make manual adjustments if I feel like it, but I don't have to. Basically, someone who is smarter and more informed about these things than I am is providing investment advice, and I just say yes or no. I like that! I also like that the amount I started in December has returned 5.5% so far, and the larger amount that I tucked away for this year's taxes has already jumped 3%. Plus, it's nice that trading is inexpensive and scaled based on how much you have invested with them. You can try it out yourself -- there's no minimum amount to get started. If you have $500 or more to add (I didn't), you can get a $25 credit by clicking here and signing up.

That's it. It's nothing fancy, and it's just a start. But it IS a start, and now I can just check on it every now and then to see how my money is doing. Excellent for busy (or just plain lazy) investing beginners.

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