Getting Started in Investing

Introduction
No one knows the future (except God).  God willing, I will reach my 80^th birthday in February, 2008.  80-year olds have less future, on average, than younger people.  Based on that simple, self-evident truth, I have to do something about the situation I find myself in.  Most of you have heard this before.  I’ve been struggling with it for the past three years.  I’ve made a decision.  I’m going to begin an orderly (I hope) transition out of the direct management of investments for other people, but continue to give advice and counsel for as long as I have the energy and conviction that I can be of help.  I envision part of that counsel to include suggestions for those who would like to try to learn to invest on their own.

The Plan
My plan for accomplishing this transition is to begin writing a study course consisting of an undetermined number of letters.  The document you are now reading is Letter 1.  The following are some of the specific objectives of this study course.  (1) For those whose money I am now managing, to get you adequately prepared to handle all your own purchases and sales of individual investments, using the letters.  (2) For those whose money I am not managing, the same as the first objective.  (3) For those who don’t have an investment program, but want to start one, how to get started.  (4) For those who want to learn how to become independent and gain expertise in learning to invest successfully, how to proceed, i.e., what to read and study, who to listen to, etc.

Beginning Steps
The very first step I recommend is to read Harry Browne’s book, FailSafe Investing.  It is available at www.amazon.com, or may be downloaded from www.harrybrowne.org for a very nominal cost.  I urge you to proceed no further until you have read this book.  It is short and easy to read, and absolutely basic to investing.  You will learn about a concept the author calls The Permanent Portfolio.  It is so important, we will probably do a lesson on it alone.  

The second step I recommend is to decide what your risk profile should be.  Examples of people who should choose low risk (maximum safety) would be those with little savings, widows with low income, i.e. people who cannot afford to lose much.  High wealth or high income people, and younger people can usually take more risk, but you must take into consideration your own emotional profile.  FailSafe Investing is very helpful in discussing this subject.  And your decision will come into play early in our study course.  You’ll see how.

The third step is to decide how much you will commit to your investment portfolio.  How much are you willing to set aside and leave alone for five to ten years?  And how much can you add to your savings each month?  Do you have any debt other than your house mortgage?  These are the key questions.  In this connection, I humbly suggest and urge you to read chapter 15 (Storing God's Property) and chapter 16 (Principles of Investing) of my book, Biblical Economics…Beginning at Square One.  This book is now available for free online.  They will help you decide what your investment program should be.  If you already have qualified retirement savings (IRA, 401-K, etc.), I would recommend you include it, especially any of these which you have the right to self-administer.