I know people want to do this, but don't know how to start, and might not have a lot of money to start. Here is a basic and simple outline how you can get started with $100 or $50 a month.

I was reading through an industry rag and came across a Schwab advertisement. It outlined how you can start investing at Schwab with $100 to start, with subsequent investments as low as $1 a month (If you can only afford $1 a month, I probably would wait until you could do more...)

Per the marketing literature, this investment option is available on 175 funds in various asset classes. "Holy Schneike" you are probably thinking..."Which one do I pick?" (I will tell you).

There is an index fund called the Schwab Total Stock Market Index. The ticker symbol is SWTSX. Using a simple to understand example, it is similar to buying an amount of every stock in the stock market. A mutual fund allows you to pool your money with thousands of other investors and diversify your investment, no matter how small amount you invest. There are so many companies in this pool that if you invested $100, you probably aren't investing even a penny in any individual company except in a very few instances (maybe, I didn't do the math, it might be less than a penny for any company). When you hear the word diversification, this, to a degree, is what it means.

The simple beauty of investing $100, then $100 each month (or more for those that can afford the risk) is it becomes a habit, and you dollar cost average over long periods of time. Simply put, dollar cost average means you buy more shares when the market is low, and you buy less shares when the market is high. Most importantly, $100 a month is an easy approach to understand and most importantly, it gets you started.

I would give examples what $100/month invested starting three or four years ago would net you now, but trust me when I say, it would surprise you.

After a couple of years of doing $100 a month and the market performs well, you will then be in a position where you can pay your tithing via a donation in kind, which allows you to lock in your gains tax free (but don't worry about that - I only mention it because I am a broken record on its benefits - that can be the advance lesson - don't let it paralyze you from action). Most importantly, you have an investment base which will continue to grow over time. You need to emotionally prepare for ups and downs (especially declines) of the market (because it will) and commit to continue buying your $100 a month, even when it seems there is "blood running in the streets". Think of it as another bill. Pay it and forget about it....and continue paying it....

One last safety tip - I wouldn't invest any money you need to spend in the next five years.

#createwealth #simpleandsmart #anyonecandoit

If you want to read more about the fund I mention above, here is the link: http://www.schwab.com/public/schwab/investing/investment_help/investment_research/mutual_fund_research/mutual_funds.html?path=%2FProspect%2FResearch%2Fmutualfunds%2Foverview%2Fschwabfunds.asp%3Ftype%3Dindexfunds

The advertisement mentioned going to schwab.comOIaboutfunds to learn more, but I didn't go in and read what was there. I would expect there is a lot of educational materials.

Good luck! Hopefully this puts it in a easy to understand framework, but happy to answer questions anytime to help a fellow coug.

#nomoreexcuses

One last (edit): I see some pretty whack jack comments about investments on CB. It seems that people have a little success and think they are experts, or else they like to validate what they are doing, when they don't really know what they are doing. Be careful...