Investing in securities at any level requires some level of knowledge and the understanding that unlike a savings account or certificate of deposit, your money is uninsured and can easily vanish.

Start by figuring out how much of your monthly budget you can set aside that you could afford to do without. If you have the extra money, open an online trading account where there are no fees other than fees to purchase or sell stock. Scottrade, Ameritrade, ETrade, Schwab and a number of brokerage houses have on-line trading web sites that are easy to use.

If you do not have time to do the research and keep up with your investments on a weekly basis, we would recommend putting your money into low risk mutual funds through T Rowe Price or another quality brokerage.

Investing in Stocks

Our recommendation is to purchase at least 100 shares of a single stock. The reason for this is that companies perform stock splits, reverse stock splits or mergers that will affect how you compute your gain or loss when you sell, come tax time. Typically 100 shares are split evenly and make it easier to compute a gain or loss.

Day trading (or short term trading) is a mistake...holding stocks at least 1 year is highly recommended. If the company has a good business model and a revenue stream, over the long term, your chances of making money are pretty high. If there is no real business model or revenue stream, don't bother. Avoid development stage companies!

Stocks that pay dividends should represent at least 20% of your portfolio. You can take the dividends and invest in other stocks. Bank stocks like Wachovia (WB) and Bank of America (BAC) pay dividends over 4%. Wait for these stocks to be out of favor a bit and buy 100 shares or more.

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