Becoming a Better Investor

Achieving financial freedom or financial independence is a worthwhile goal to pursue at any age. Life can be more enjoyable and less stressful when you have enough money to live the life you want.
I have learned I can only work so many hours each day, each week. Realizing that, I must put my money to work by investing.

Over the next few weeks I will give tips on investing. Actually, last week's $ Tip discussed the services offered by a Full Service Broker vs a Discount Broker, was a good start.

Education is the key. I offer four suggestions. Pick one or two to raise your understanding and commitment to investing:
1. Take a class. Most adult education programs at your local high school or college offer a class on personal investing. Take a friend. Learn together. Go out after the class and discuss what you learned and what you can implement.

2. Read. Join AAII, the American Association of Individual Investors.
The cost is $29 per year. They are dedicated to people like you who are learning about investing. They offer a monthly publication filled with good, basic information. Also, they offer chapter meetings where you can meet others interested in investing. Go to www.aaii.com.

3. Read more. Buy one, yes one, money/investing magazine. Read it cover to cover, even the ads. Here you are familiarizing yourself with a new vocabulary. The more you see and read the words, the sooner you will understand their meaning. You don't really need a year's subscription until you find one magazine you enjoy and understand. Or, regularly read the Business Section of your newspaper.

4. Find a "money buddy". Doing things with another person is always more fun. Just as Weight Watchers encourages buddies and exercise routines suggest partners, you know you are more likely to stick to your financial goals and learn more if you have a buddy.

Be $ smart - learn investing to build wealth and financial independence.

Full Service or Discount Broker

I was with some friends this weekend and one asked me "What is a discount broker?"
As I often encourage you to invest your money to help it grow, this might be a good time to explain the difference.

A full service broker is a firm like Merrill Lynch or Morgan Stanley. Here you will find a "broker" or sales person who may be called a Financial Advisor, Wealth Management Advisor or Retirement Specialist.
These large, full service firms will give you financial advice, help determine your financial goals and your risk tolerance. They typically have large research departments or purchase outside research on various companies' stocks and bonds. They use this research to recommend to their clients a mixture of investments (asset allocation) and will direct the buying and selling of these investments - usually for a substantial commission.
The commission charged is based on the price of the stock times the number of shares. The cost to buy or sell could be hundreds of dollars. This is how they get paid.

(Remember:
"What's this going to cost me? How do you get paid?" from a previous $ Tip.)

A discount broker is a firm with many of the same functions as above but without as many services. They will offer "canned" research, something anyone can find online. They will not call you recommending investments nor will they take pains to get to know you.
These firms are more "do it yourself". They assume you know what you are doing. They will take your order to buy or to sell and they will not offer comment.
Actually, the greater discount on buying and selling is when you talk to no one and enter the trade online. (A trade is a buy or a sell.)
There is one discount brokerage that charges $5 per trade for almost any size trade (50, 100, 1000 shares). Others may charge $7.50, $10 or $20 per trade. Scottrade, eTrade, Ameritrade are some discount brokerage firms.

Be $ Smart - know what type of brokerage firm is best for you to build wealth and financial security.