You’ve probably heard stories about fortunate investors who “get in the ground floor” of a new, hot company and quickly make a fortune. But while these things may happen, they are exceedingly rare and often depend on hard-to-duplicate circumstances — and they really don’t represent a viable way of investing for one’s goals. A far more tried-andtrue approach is the “slowand-steady” method. To follow this strategy, consider these suggestions: Start small — and add more when you can. When you’re first starting out in the working world, you may not have a lot of extra money with which to invest, especially if you’re carrying student loan debt. But one of the key advantages of the slow-and-steady method is that it does not require large investment sums to get going. If you can afford to put away even $50 or $100 a month into individual stocks or mutual funds, month after month, you may be surprised and pleased at how your account can grow. And when your salary goes up, you can put away more money each month.
Take advantage of an employer’s retirement plan. If your employer offers a 401(k) or similar tax-advantaged retirement plan, try to take full advantage of it. Again, if you’re just beginning your career, you may not be able to put away much in this type of plan, but even a small amount is better than nothing. And as soon as you can possibly afford it, try to put in enough to earn your employer’s matching contribution, if one is offered. These types of plans can offer some key benefits — and perhaps the biggest one is that investing is automatic, in that the money is moved directly from your paycheck into the investments you’ve chosen within your 401(k) or other plan.
Be prepared for downturns. The financial markets will always experience ups and downs. So, you need to be prepared for those times when your investment statements may show negative results. By understanding that these downturns are a normal part of the investment environment, you can avoid overreactions, such as selling quality investments with good fundamentals just because their price has temporarily dropped.
