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The remaining simple tips on personal investing from a regular person. This balanced investment strategy is designed to be low maintenance as well as low risk, so investing doesn't have to become your second job.

Continued from Low Risk Investment Strategy

Conservative Investments

The Strategy:  Low risk investing is based on the assumption that history will continue for the foreseeable future. Therefore, even though any one company may fail, over time, the overall market will continue to grow beyond the short term ups and downs.  We invest, then, as broadly and as balanced as possible.  The market I'm referring to conducts financial activities in 3 major economic areas:  1 Real Estate, 2 Stock Market, 3 Bond Market.  Each of these 3 reacts to the economy differently, so, when one is up another is down.  A balanced investment portfolio has roughly the same amount in each of these 3, but your focus should be  on buying when an area is "down".  For instance, in 2004 stocks were down, but Real Estate and Bonds were up, respectively.  Do you have the discipline to buy stocks when everyone else is buying Real Estate?  Since you're investing over 30 years, you will have plenty of down cycles in each area.  As you near retirement, weight your investments more towards secure, income producing vehicles, like bonds and income Real Estate, with a smaller amount in high dividend paying stocks.  I strongly recommend Morningstar as a very good objective source of information for Stock, Bond and some forms of Real Estate investing.  Here are some recent popular books about investments and reducing risk.

Real Estate:  Since I'm not a professional advisor I can call your home an investment.  Regardless of market timing, single or married, as soon as possible, you should buy a home.  The amount you pay to rent is like throwing money down the toilet.  This is the easiest, safest and most practical investment you can make.  This will take care of the Real Estate portion of your investments for quite some time, while you're working on the other areas.  Once you come back to Real Estate, for long term investing, according to Will Rogers, "Buy land, they aint making no more of it."  Once you retire,  sell the properties (except where you live) and invest in Real Estate Investment Trusts to make your Real Estate investment more liquid and establish an income stream.  I don't propose anyone manage or develop their own Real Estate unless they wish to spend a lot of time and money gaining the education and skills required.

Stocks:  Because of risk, it's far better and less time consuming to buy what is called an Exchange Traded Fund (ETF) than it is to buy individual stocks.  You can get ETF's that track the Dow Jones, NASDAQ, S&P 500, Russell Index, etc.  If you invest in the first 3, you're investing in almost every big business.  If you want more small businesses, the Russell can add that.  All four would spread your stock holding across almost the whole market, minimizing risk.  As my investments taught me, if you're buying individual stocks, you need to spread your holdings over all business sectors and you'd better do your homework.  Even the "experts" don't do very well picking stocks, as you can tell from the recent performance of most mutual funds...which is why I don't recommend buying mutual funds.  It's basically a bet that, between their bagel and coffee and their 3 martini dinner, the fund managers actually concern themselves with anyone's income but their own.

Bonds:  This is a less risky way to invest in business.  It's less risky because, in the event of a bankruptcy, a corporation has to try to pay it's lenders, first.  When you buy a bond, you're essentially lending the company your money in exchange for a set amount of interest (called Dividends).  There are bond funds that do a great deal to remove the complexity and sometimes high cost of individual bond investing, while spreading your bond investment across many businesses.  There are many different types of bonds and bond investment strategies, but my investment strategy is designed to be low maintenance, for average investors like myself.  If you want to investigate the more complex methods, make sure you use a good professional financial advisor.

Finally, as you're trying to do your best financial planning and patiently suffering through the ups and downs of the economy, you may decide you need help.  Every financial move involves a risk and requires we rule out all other options.  This takes wisdom.  I can't give it to you!  Neither can a professional financial advisor.  The only one who gives us true wisdom is God.  Yes, He's interested in your financial success.  If you want His help, click on God help me.

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