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While you learn I'd suggest you invest your funds in an S&P 500 Index fund (such as Vanguards 500 Index Fund ticker VFINX) or a similar ETF such as ticker SPY.

Also start a free CAPs portfolio in Fooldom. Once you pick 7 stocks, TMF rates your performance every day vs the S&P 500. A positive score indicates you are beating the index. I'd wait on purchasing stocks until you can consistently beat the S&P. Once that is achieved converting to buying stocks is easy. Until then you are better off to use mutual funds and let pros do the stock picking.

As to picking stocks and building a portfolio, do you know your investment style? Some prefer dividend paying stocks. TMF's Dividend Growth Investing discussion is an excellent source of some good ones. Growth stocks are easy to find by screening services. CAPs has a screener you can use. There's a Mechanical Investments discussion board that has many screens. Value stocks are a bit more difficult because you need accounting skill to rank them but we have several Value stock discussion boards and don't forget the Berkshire Hathaway discussion board. BRK-B is a classic value stock run by Warren Buffett.

You can also look at the CAPs portfolio of anyone posting on these boards. Find some who match your style and watch what they are doing with their portfolio.

As to how to allocate funds, it depends on how much time you can spend following your investments. You'd like to read their earning reports, news releases, and listen to the quarterly earnings call. For many the time limits you to about 7 stocks. That's a good place to begin. As you gain experience you can handle more.

And of course this depends on your investment goals. For the young starting a long career, the above applies. As you get closer to retirement or if you will need the funds to buy a home or send children to college, when you will need the funds becomes more important. Then you might want to include bonds in your portfolio.

Best of luck with your choices.
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