Its interesting to see what a professional will say in a book considering all the hucksters out there that discuss investment and stock market wealth along with self-proclaimed experts that dont have the credentials that Mr. Schwab has. Heres what his guidance is:
1. Invest for growth
2. Divide your portfolio
3. Know yourself
4. Keep your perspective
5. Stay informed
Taking care of the basics:
1. Create a financial safety net (savings of 2 months to 6 months of living expenses)
2. Make sure you are adequately insured
3. Contribute the maximum amount to an IRA and 401(k) or 403(b) plan
4. Pay yourself first (Make it a habit and start with at least 5 to 10 percent of your gross income)
5. Get started now
He discussed being 24 years old and going into high-growth stocks because he wanted to get away from the number zero, as in where he started from, at a rapid rate. But he does stress that before you invest, handle the basics. Your personality plays an important role in the kind of investment plan you develop. The two most important aspects to look at are your time frame and your attitude toward risk.
A penny for your stocks:
When you buy penny stocks, youre seldom buying quality, something thats crucial in stocks. Schwab claims that although penny stocks rank at the bottom in terms of quality, people get involved because they act on a hunch and believe these stocks look like easy money can be made both bad reasons to invest.
If you include only US stocks in your portfolio you are bypassing nearly half of the worlds stock market opportunities.