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Thursday, 4 February 2016

You have a good job, your debt is under control, and you have some savings you'd like to invest.

But investing seems complicated, and it can be hard to differentiate unbiased information from sales pitches. How do you know what to do? Where do you start?

Check out your company's 401(k) plan

One step you should take when you're jumping into the market is to make sure you're taking advantage of your company's 401(k). If your company matches any of your contributions at all, make sure you're contributing as much as you can. But according to financial advisor Ray Steely, it all depends on whether your company matches any of your contributions.

First, make sure you understand the details of your plan. If your company does not match your contributions, he recommends you make a minimal contribution in order to get some tax benefits, but not the maximum contribution.“If your company does not match, you could get a better return on the open market." If you company does match, contribute as much as you can.“That's free money," Steely points out.

Educate yourself

Sounds easy enough, right? But there's almost too much information out there and it can be overwhelming. Here are some suggestions to help you get started:

Online courses

  • Investing In Your Future – This 11-unit course includes high-level and in-depth information about finances and investing that also provides links to many other resources. The program is sponsored by Rutgers Cooperative Extension in cooperation with the Cooperative State Research, Education, and Extension Service of the U.S. Department of Agriculture, the Financial Security for All community of extension, and the U.S. Securities and Exchange Commission. 
  • Investopedia University – Here you'll find tutorials on everything from getting started to discounted cash flow analysis. The topic list is comprehensive and the tutorials are well organized and easy to understand.
  •  iTunesU — iTunesU is loaded with information-packed videos, educational programs, and courses. “Money101: Retirement and Investing" is a very good place to start. 

Books

  • “The Elements of Investing" by Burton Malkiel and Charles Ellis. Highly recommended for the beginning investor by The Wall Street Journal and mint.com. 
  • “The Intelligent Investor" by Benjamin Graham was named as a best read for new investors by investopedia.com and forbes.com
  • “The Essays of Warren Buffet: Lessons for Corporate America" got high marks from investopedia.com and forbes.com as well.
  •  Investopedia and Forbes have also published great lists that should be on every investor's bookshelf.

 Get some advice

“Find somebody you can talk to," financial advisor Steely recommended. “This doesn't have to be a professional… just someone who can offer basic advice, tell you about their experiences, and mentor you."

You also might want to consider joining an investment club. These are informal groups of investors who meet in person to discuss investments, share experiences, and in some cases even make investments. Because you're just getting started, look for one that primarily exchanges ideas versus actually pooling money.

The Motley Fool has a board where investors can find groups, and so does Betterinvesting.org. If you decide to go pro, make sure you do your research and take the time to find the right person. Get recommendations from family and friends. Carefully interview candidates and make sure you are comfortable with them. Advisors should never pressure you into buying financial products.

“You're not looking for a salesperson," Steely added. “You're looking for a relationship with someone who can provide education and consultation, and has your best interests in mind at all times."

Many financial news sites, including The Washington Post, recommend finding a fiduciary advisor, as they are bound by law to make recommendations based on what is best for you, the client. Fiduciary advisors are commonly referred to as Registered Investment Advisors. You can search for one at the National Association of Personal Financial Advisor's web site, napfa.org.

Securities and Insurance Products Are: NOT Deposits, NOT FDIC Insured, NOT Bank Guaranteed, NOT insured by any Federal Government Agency and may LOSE value.

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