Reading stocks report of the newspaper
With boatloads of data and other financial information available on the Internet, it has never been easier to do your own investing. And there's nothing quite as gratifying and empowering as doing exactly what you want to do with your own hard-earned cash.

What's more, with traditional pension plans going the way of the dinosaur, all of us are expected to take control of and manage our retirement savings—whether it's through an employer-sponsored 401(k), IRA or other special account. Making sure we have enough to live comfortably in our old age falls squarely on our own shoulders. So, first things first when it comes to financial planning. Use the retirement worksheet in the tools section to determine how much you'll need to retire comfortably.

Being your own financial planner means you make all the overall decisions as well as get involved in the nitty-gritty of choosing specific investments. This Money Group guide is designed to help you and your group members prepare on both fronts. However, there are times, like in the scenarios below, when it makes sense to ask for help from a professional financial planner. For instance:
  • When you're too busy. Smart investing takes time and hard work. If you're often swamped, the most responsible thing you can do is wave the white flag and hire someone to help.
  • When you're in transition. Starting a family, going through a divorce, losing a spouse, getting a big promotion, receiving an inheritance or taking on responsibility for an aging parent are all big life transitions that can affect your finances and trigger the need for good, solid planning help.
  • When you're suffering from inertia. When it comes to actually choosing investments, making the calls and doing the paperwork—you freeze. A planner can help jump-start that process for you.
  • When you're starting your own business. A planner can help with some of the more complicated financial aspects of your new role as a business owner, such as what type of insurance you'll need, what kind of self-employed retirement plan you should use and how long you can manage on a minimal salary.
10 questions to help you decide what's right for you

How you answer these questions will determine if you're a do-it-yourself investor or if you need to find a good planner. (To find a qualified fee-only planner in your area, go to the website for the National Association of Personal Financial Advisors or ask friends and relatives you trust for referrals.) And remember, even if you go the planner route, it's still your money. It's your responsibility to become educated about the decisions you and your adviser make.
  1. Do you enjoy reading about investing and keeping up on market news?

  2. How do you feel about risk? (Jean's take: Women are naturally more reluctant to take risks with their money. That can mean you miss some good opportunities if you're going it on your own. A good planner can lay out the options and help you find investments that will earn you money at a risk level you're comfortable with.)

  3. Will you have the time to keep up with the investments you make?

  4. Do you like the idea of having complete control over your money?

  5. Are you at a particularly busy time in your life? Has a big change happened recently?

  6. Does this statement describe you: "I'm certainly interested in having enough for retirement and earning a good return on my savings, but when it comes to the details, my eyes glaze over. I'd rather do just about anything else."

  7. Do you have trouble with the idea of trusting someone else with your money? (Jean's take: Hiring someone to make decisions about your hard-earned cash certainly seems like a risky move. How can you find someone you trust? But the truth is, there are plenty of professionals out there who will truly help you meet your financial goals.)

  8. Are you intimidated by money and all the jargon that goes with it? (Jean's take: Too often women worry that they'll look stupid, so they avoid getting the help with their money that they need.)

  9. Are you worried that a financial planner may be too aggressive and will push you to put your money in investments that are too risky for your taste?

  10. Who can help you find a good financial planner? A family member or friend who swears by theirs? A professional organization? A colleague?

3 tasks to get you started on investing basics whether you choose to hire a planner or not 
Here are three tasks you can do this month to become your own financial planner—whether or not you decide to seek help from a professional.
  1. Learn About Mutual Funds
    Mutual funds are pools of money managed by investment companies. You buy shares in the fund and the fund in turn buys a wide variety of stocks and/or other investments. Funds let you diversify among far more investments with a small amount of money than you could ever do by investing yourself. Index funds invest in a stock or bond index such as the Standard & Poor's 500. Your investment rises and falls with the index itself. Actively managed funds are run by a portfolio manager who chooses stocks or bonds. You can research specific funds on

    Here's what to look for:
    • Who is the manager and what is his or her track record? You want someone whose performance has been in the top 25 percent of their fund category and preferably a manager who has been in the business for years.
    • The cost. Look at the expense ratio. This is the percentage fee the investment firm takes from your portfolio to spend on running the fund. A large company stock fund shouldn't charge more than 1 percent. Index fund fees are the lowest cost funds because they are not actively managed.
    • Does the fund fit my investing needs? Be sure to look at the fund's portfolio holdings to make sure it is invested in the kinds of stocks and bonds you've determined are right for you.

  2. Learn How to Pick a Stock
    Despite its dramatic short-term ups and downs, historically the stock market consistently delivers better long-term returns than any other investment. Investing in a handful of individual stocks, however, can be far riskier.

    Here's what to look for in company financial statements and websites such as for stock research:

    • Who's running the company? You want a stable management team with experience and good track records in the industry. In addition, Wall Street should have confidence in their abilities.
    • How's business? Determine what position a company your interested in occupies within its industry and how does the future look for that industry overall. You can be confident investing in a company with a winning product, particularly if it's a leader in its industry and there are barriers preventing competitors from challenging it.
    • What is the price/earnings ratio? The price to earnings ratio, better known as a stock's P/E, measures the ratio of a stock's current price to its earnings. P/Es are mostly used to compare similar stocks: one healthcare stock to another, for example. Or you can compare a single stock's P/E to the average P/E of its group or use the Standard & Poor's 500 average P/E as a gauge. Stocks with P/Es significantly higher than their industry average or stock market as a whole are considered pricey. A high P/E can be, but isn't always, an indication that the stock is trading at its high and does not have much more room for growth.
  1. Learn the Basics on Bonds
    Basically a bond is an IOU. The government or corporations take your investment and pay regular interest payments to you. Bonds and bond funds can help you diversify your portfolio. In years when the stock market doesn't do well, a bond portfolio can temper your overall losses.

    Here's a look at some of the different types of bonds (and bond mutual funds):
  • Treasuries. These are issued with the full faith and credit of the U.S. government. They have no credit risk at all, but as a result, they pay low interest rates.
  • Tax-free Municipals. These are issued by local authorities around the country. The federal government doesn't tax income from these bonds. And if you buy bonds issued by your own state, you won't pay state taxes either. Munis are not all of similar quality and credit risk. You have to look carefully at the financial health of the issuer.
  • Corporates. Companies issue bonds to foot the bill for expansions, acquisitions, etc. These are riskier than Treasuries but the rates can be 1 percent to 4 percent higher. Again, you need to look at the credit risk associated with the issuer.
How much do you need to save for retirement? 
If you're ready to start planning ahead, the next step is to figure out just how much you need to save to be able to afford the kind of retirement you dream about. To get a ballpark figure of how much you need to invest for a secure future, use this calculator.

Next: Are you ready to become a do-it-yourself investor? Take the quiz!

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Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


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