The Beginning Investor's Kit

Market watching has made for exhilarating cocktail conversations during the last few years. It's not unlikely you heard a friend brag, "I bought some stock in a company that manufactures stents for coronary artery disease. Paid $18 a share for it, and they just got bought out--for $54 per share!"

Or, perhaps you've heard your brother-in-law crow one time too often, "My mutual fund is up 38 percent this quarter!"

And yet you've been keeping your money in bank certificates of deposit (CDs), or, worse, under the proverbial mattress, because you weren't sure what to invest in or how! By now, you can probably relate to Lonesome George Gobel's perspective, "The world is a tuxedo and I'm a pair of brown shoes."

Inherent Risk
Investing can be as complicated as you want to make it. Or as simple. There is one certainty, however. Risk is part of the investment landscape.

After all, nothing is guaranteed. Even a bank can fail. While the Federal Deposit Insurance Corporation (FDIC) may assure you that the money in your bank account is safe, it does not insure the interest the bank promised to pay you. And if you actually did put your money in your mattress, inflation has eroded your money's buying power.

Your first investment step--is to decide what your risk tolerance is. Generally speaking, risk begets reward. Low returns are associated with low risk, and vice versa.

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