With the economy in turmoil and the stock market on the decline people ask why are you investing in the Stock Market?   To quote from A Tale of Two Cities, by Charles Dickens it is the best of times; it is the worst of times.  I am not a Financial Advisor/Planner, Stock Broker, or economic expert.  I will not name any of the Companies or funds I am invested in.  I will not recommend any news letter or broker.   I will not recommend and specific investment or stock.  I am a person who studied the market so that I could decide which plan offered by my employer I should invest my money.  I have always had a basic understanding of how the stock market worked but thought it was far too complicated for me to understand much less invest money based on my ideas.  To this point my investments were limited to Mutual Funds (offered by my employer) and two stocks I received as a gift.  I am now semi retired and have more free time and I also came into a small sum of money.  Like most people in my situation I paid off some bills and do some home improvements.  I had some money left over and decided to invest some of it in the stock market.  My first buy was to invest in a mutual fund for my grand children so that they would have something in the future.  The fund was one that is offered on the NASDAQ exchange. They developed this fund for children or people like me who want to invest a small amount for the future.  I chose this fund because I could make one free trade a month, and the minimum investment was $10.00 per trade with a $10.00 initial investment.   I set up an account for each grandchild and contribute in place of big a Birthday and Christmas present.  I hope as they get older they will take an interest in the stock market and decide to invest at an earlier age than I did. 

One thing I have learned is the earlier you invest the more you will have when you retire.  I have given my children the advice to start something now and have the money taken out first, before you spend it first.  Even with a simple $10 a month starting at age 25 and save until age 65 you would have invested $4,800 and if you had it in a regular savings account, now paying 1.65% interest, at age 65 you would have $6792.14 in the bank.  Looking at a couple of other rates:  at 2% (paid by some on line banks) you would have $7,344.39; at 3% (some CD and Money market accounts) $9,260.68; at 7% (the return some conservative investors figure you should average in the stock market) you would have $26,249.08.  Many people have told me that what good is the few dollars you would get after all those years.  I use $10 per month because you can do some simple calculations to figure what other investment patterns would produce.  For example lest say you invest $40 a month then you multiply the final amount by 4 and you now have over $100,000 if you invest in the stock market or mutual funds.  A person who makes minimum wage earns, after taxes right around $1,000, per month or $12,000 per year.  The $10 a month is 10% of their income and if invested in a Roth IRA could yield about $150 per month tax free income.

What many people do is to start small and increase savings as their salary increases.  The important thing is to save on a regular and consistent basis.  By doing this you are buying when stocks are high and low.  Most stocks will grow over the long haul and you will see growth.  People will point out that many lost a great deal of wealth with the crash of 2008.  One thing to remember is you make or lose money only when you sell your investments.  I own a Mutual Fund that was trading at around $12.00 a share in June of 2008.  It is now (May 2009) trading around $7.50 a share.  It hit a low in December 2008 of $5.25.  Because I did not sell the shares I owned in the Fund I did not lose any money.  As the market recovers and the price of each share increases I am gaining back more of the lost value in the Fund. I am also having the dividends reinvested so I am buying shares at a very low price which will increase even more than my older shares. 

I have had people ask me what if I have an emergency and need some cash can I easily withdraw the money.  The answer is no.  You can withdraw the money but you may pay a penalty, a transaction fee and you will have to wait a week or more to get your money.   To over come this problem I opened an online savings account.  (You will have to decide if this works for you)  I then have a set amount taken from my checking account each pay day (twice a month) and transferred to my online savings account.  For example I will deposit $15 each pay check and invest $10 each month.  This allows me to build up an emergency fund, that is not too easy to get at but is a ready source of cash, while still investing in the future.  If the market takes a big down turn I would also have some money to buy extra shares at a low price if I wanted to so.  In my Mutual Fund, that I referred to earlier, it had its big dip in October 2008, and did not start to recover until March 2009.  I went on line and changed the monthly amount I was willing to invest; I had extra money in my account, and increased to $20 a month and was able to buy 4 shares for the same amount as I was buying less than a share in June 2008.  Since November I have purchased the equivalent of 2 years of investing ($240) at the high rate by investing, ($60) some from my reserve account and buying at the lower rate.  By saving this way if I decided to increase my investment I can try it for a few months by putting money in my savings before I increase my investing.  It is too much of a burden then I just cut back but have added a little more cushion to my savings.

Compound interest is an amazing thing.  There is a rule of thumb that at 7% you money will double every 5-7 years.  If you invest $1000 a year from age 20 to age 30 you will have more money at 65 than a person who invests $5000 a year from age 55 to 65.  If you do a very quick and simple math the $10,000 you have invested at age 30 earning 7% will be worth $20,000 at age 37 and $40,000 at age 44 and $80,000 at age 51 and $160,000 at age 58 and $320,000 at age 65.  The person who waits until age 55 and puts $5,000 will have less than $100,000 at age 65.  The important thing is the more money you can invest early in your career the better off you will be when you retire.

I have a financial planner that advises me on some things and I feel comfortable with him and his advice.  I have worked with several over the years and when I am not comfortable with them it seems that I do not make wise financial decisions.  I have been with this one fro several years now and feel he is working for me.  Even though I have a Financial Advisor I still do my research and make my own decisions.  After all it is my money not his

For more information on investing check out this article I wrote on an introduction to the stock market and investing.

www.associatedcontent.com/article/1691465/a_basic_introduction_to_investing_in.html.

Finally the best advice on investing is to save early in your career and to save on a regular basis.