Message Font: Serif | Sans-Serif
No. of Recommendations: 3
Do not be embarrassed about not having started investing. It's a scary thing and requires a steep learning curve. But you have possibly decades ahead of you and the worst thing that can happen is that you never start investing.

I personally ignore doom and gloom "the Fed has manipulated the market" rhetoric of some. Frankly, the Fed's monetary policies always help manipulate the market and it's supposed to do so. But it's a small part of what causes the stock market to grow or retract. Many other things have far more impact, such as investor sentiment, the economy, the strength of the individual companies, etc. You can't control every or even most factors. (Example, my first investment foray 3 decades ago was with a company whose CEO was arrested for murder and the company collapsed. Ha!)

My suggestion is that since you have a relatively modest lump sum to start with is that you stick to mutual funds with the majority of it. You get instant diversity and professional management. Look for diversified funds with a very long track record of positive growth and only invest in no-transaction fee, low cost funds from any reputable discount broker, such as Fidelity, Schwab or Vanguard. An advantage to them is that they also have free educational tools online.

You can play with a small portion of your funds and buy individual stocks with it, which will help you learn and hopefully add to your growth, as well. Best bet for that is fee-free sites such as, where you can buy as little as one share of a stock at a time without a fee.

Know going in that you WILL take a hit to your funds sooner or later. And if you have my luck, it will be sooner. For example, when I first started seriously investing it was in late 1987, just before Black Friday, when the stock market's bottom fell out. I had put a large lump sum (huge for me, at the time) into the market and within weeks had lost an alarming amount. What to do? I was beside myself! More out of paralyzing fear than anything else I ended up doing nothing, thankfully. Within a few months I had completely recovered my losses. The second time I put a lump sum into the market (and still had my original investment, plus a lot more in it) was days before the US invaded the Gulf and the stock market lost about 20%. See? I have great luck! Since then the markets have had dizzying drops many times and in our great recession starting in 2007 the S&P actually lost 56% of it's value at it's height and it took a year and half or so to recover. It went from 1565 to 682 and took at where it is today, above 2767. I rode it out and added to my invested funds when I could and have reaped the rewards of that. (

The worst thing you can do is pull out when the market drops because you simply do not know when it will pick up again and most investors who pull out miss the vast majority of it's recovery and following growth. They are so scared they hold their money on the sidelines until the market has recovered enough that they feel more confident on getting back in. But by that time the vast majority of gains have been made and all they did was lock in their losses.

If you are too fearful to entrust your entire lump sum into the markets at once, then set up a set amount to put in every month until you are fully invested.

And, remember, your emergency funds should never be invested. Make sure that if the worst thing happens that you have enough money to live on for at least 6 months to a year, minimum.

I hope this helps. This is my first post here, but I lived your uncertainty, so it made me feel for you.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.