Investing

I have to admit, I’m pretty clueless when it comes to investing. It was something that my mother never taught me about as a kid. Hell, we rarely talked about money at all. Several years ago I read a very basic personal finance book which introduced me to investing – something I had never imagined myself doing. Here’s what I remember from that book: money market funds are a safe place to keep an emergency fund because they are extremely low risk, but also low reward; bonds are slightly higher risk and slightly higher reward; stocks offer greater rewards but at the expense of being extremely risky and difficult to understand. Admittedly, after three years I’m sure my memory of this book has become foggy, but this is what I took away from it. Consequently, what money I did sock away was all stuck into a money market fund for safe keeping. I always planned to learn more about investing and diversify at some later point when I had a better understanding of what I was doing – that point just never came.

My trusty money market fund has done its job. My savings were kept safe and earned at least a small amount of interest, and it did help me out in an emergency. Last year when the hand-me-down car I’d been driving since I first got my license finally decided to die, my money market fund provided me with enough money to make a sizeable down payment on a used car – without totally wiping me out.

However, the time has come for me to finally do what I promised myself I would do years ago and start learning more about investing. To that end, I’ve begun reading Charles Schwab’s New Guide to Financial Independence. I picked it up at the used book store a couple years back but never got around to reading it. I’m now on page 62 and so far, so good. It starts off very simple and explains investing in a non-intimidating way that even the novice (aka – me) can understand. I was worried it would be somewhat dry, but it’s held my interest so far and I’m zipping right through it. By the time I finish reading this book, I plan to (dun-dun-DUN) diversify my investments.