Lowering Investment Costs

The IRA is a gift from the government and it is absolutely the best deal the small investor has going. The money you put into an IRA - up to $4000 annually (in '05) - grows tax free. The government gets zip, zilch, nada, bubkis, the big zero - until you start taking that money out during your 'golden years'.

Mutual funds are simply baskets of stocks from many different companies. These investments offer instant diversification and, if you shop around, you'll discover mutual fund families that offer a number of kinds of mutual funds. Never pay an up-front fee, called a 'load', to buy into a mutual fund. No- load funds perform just as well.

Buy good conservative mutual funds from a family of funds. Then hold on to them. Every time you sell a few shares, you create what the IRS calls a 'taxable event', as in "give us our money". The best strategy is to buy good and hold on for the long term.

If you use a full-service broker, but don't do a lot of trading, switch to an online or discount brokerage. The full service companies take a big chunk of your earnings, so cut your investment expenses for services you don't use. Investors who aren't active traders don't need a full service brokerage and their menu of fees.

It's unlikely that you can maintain your current lifestyle on Social Security benefits alone. Even if you're nearing retirement age, you can still save some earnings for a rainy day. Open an IRA and make the maximum contribution allowed each year. Since you don't have to start withdrawing IRA money until you're over 70, you can still build a tax-free nest egg, even if you're starting late.

If you're not the investor type, or you're going to need that lump of cash in the next 12 months, always go with the money-market account. It'll pay a bit more interest and it's just as safe as a savings account.

No one has any idea of where the stock market is going - not even your broker. Check out a couple of personal finance books from the library, learn the basics, and handle your own investments. It's not hard, once you learn the basics and it'll save you a lot in broker's fees over the years.

If you're fortunate enough to work for a corporation that offers 401k benefits - sign up tomorrow! Many companies will match a percentage of every dollar you put in. So, you put in $100 and your company gives you $25 - free.