Dave On Saving And Investing

Save consistently over time. Someone who is faithful about saving a little money ever month over a lifetime will build wealth. Too many people try a get-rich-quick scheme and lose their money. Disciplined savings will out-pace any investment scheme.
We live in one of the richest countries in the world, and yet the average family does not have over $1,000 in the bank.
Save for an Emergency Fund, Purchases, and Wealth Building.
Step one is the beginner emergency fund -- $1,000 in readily accessible funds. Once debt is paid off, increase emergency fund to 3-6 months of living expencses. Unexpected events do occur - expect it! We all go through "times of famine." Whether it's a layoff, lengthy illness, large financial loss, etc., we need to be prepared and save up while we can. It will allow us to better cope tough times, and in some cases, to survive.
A great place to keep your emergency fund is in a money market accoutn from a mutual fund company.
Your emergency fund is protection for you and your investment programs; it is NOT a big earner. DO NOT TOUCH this fund for purchases.
Instead of borrowing for major purchases, save and pay cash. One definition of maturity is "delaying pleasure." If you finance a $4,000 dining room suite at 24% for 24 months, you will pay $211 per month for a total of $5, 075. Instead, put that $211 away each month, and in 18 months you will be able to pay cash. Plus, when you pay cash you can always negotiate a discount, so you will be able to buy it even earlier.
Individual stock purchases very seldom make sense for the typical family. For every success story, there are hundreds of publicly traded companies in bankruptcy. The person who does not research stock for a living cannot hope to follow the necessary trends and measurements to accurately pick stocks. Individual bond purchases have the same inherent problems and risks. Mutual funds are the best method of investing in the stock and bond markets for most people.
Annuities are simply savings accounts with a life insurance company or financial institution. They are not insured by the Federal Government. If the company goes broke, and a few have, you could lose all your money.
The purchase of futures or commodities is foolish for the average person. Your chances of hitting the home run you want are better at the roulette table in Las Vegas.
Real estate investment can be a great inflation hedge and a great vehicle for amassing wealth...But never invest in real estate without having a substantial cash reserve in savings to smooth out the rough months. But only deeply discounted property and borrow little or nothing on it. If your payment is $750 and the rent is $800 you are still losing money because of vacancy, maintenance, bad tenants, and miscellaneous other drawbacks overlooked by the novice investor.
Never invest in anything you do not understand thoroughly. If you cannot explain it to someone else, you should not buy it or invest in it. One in five Americans will be victimized by a financial scam in their lifetime.
Mutual funds offer the common man access to good diversification and good management. Many funds will allow as little as $25 to $50 a month or a little as $50 to $500 one-time investment. These are not short-term investments. If you cannot leave money alone at least 5 years, then you should not invest. By leaving your investment alone in any possible ten-year period in the last 69 years, you would have made money 97 percent of teh time and would have averaged over 12% a year.
For retirement savings, if your 401K has a company match, max it out. Otherwise, go for the Roth IRA over the traditional tax-deferred IRA. Never borrow on your 401K.