1. Figure out your risk profile--if you're young and won't need to use your savings for a while, you can take a lot more risks.
2. Your risk profile determines the ratio of stocks to bonds that you want to invest in. Stocks are higher risk, but they've historically given much higher returns than bonds. One bit of classic investment advice is "put {your age}% in bonds, everything else in stocks."
3. Buy index funds or ETFs. For longer term, ETFs are a better deal, and while supposedly less "convenient," it really isn't hard to open an account with an online broker and buy ETFs. You have a lot of options here, but the S&P500 is the standard. You could put some percentage into emerging markets, small-caps, etc. The nice thing about ETF's, or index funds for that matter, is that they're partially diversified by nature, so unless you really try you're not going to get a portfolio that's highly susceptible to one particular type of risk. Remember that every time you trade you're probably paying a brokerage fee, though--if you pay an $8 fee on a $1000 investment, that's almost 1% gone--a few months of expected returns!
4. Repeat as you save money.
5. Ignore all market advice, news that "X is a bubble," "Y is about to crash," "Z is about to take off," etc. People who are consistently right about this sort of thing are making billions in the stock market, not writing blog posts or newspaper columns. And even if they are working on Wall St, it's difficult to tell the difference between luck and acumen. If returns were purely random, with nothing called "skill," we'd be statistically quite likely to see someone like Warren Buffett--who has beaten the market consistently--just like we're statistically quite likely to see someone win the lottery. Buy and hold, only sell to spend. That's the only strategy you follow!
6. Exception to 5: if you like to gamble. :) There's nothing wrong with having a "fun" investment or two, as long as you know that they're a consumption good and don't really count on keeping them.
2. Your risk profile determines the ratio of stocks to bonds that you want to invest in. Stocks are higher risk, but they've historically given much higher returns than bonds. One bit of classic investment advice is "put {your age}% in bonds, everything else in stocks."
3. Buy index funds or ETFs. For longer term, ETFs are a better deal, and while supposedly less "convenient," it really isn't hard to open an account with an online broker and buy ETFs. You have a lot of options here, but the S&P500 is the standard. You could put some percentage into emerging markets, small-caps, etc. The nice thing about ETF's, or index funds for that matter, is that they're partially diversified by nature, so unless you really try you're not going to get a portfolio that's highly susceptible to one particular type of risk. Remember that every time you trade you're probably paying a brokerage fee, though--if you pay an $8 fee on a $1000 investment, that's almost 1% gone--a few months of expected returns!
4. Repeat as you save money.
5. Ignore all market advice, news that "X is a bubble," "Y is about to crash," "Z is about to take off," etc. People who are consistently right about this sort of thing are making billions in the stock market, not writing blog posts or newspaper columns. And even if they are working on Wall St, it's difficult to tell the difference between luck and acumen. If returns were purely random, with nothing called "skill," we'd be statistically quite likely to see someone like Warren Buffett--who has beaten the market consistently--just like we're statistically quite likely to see someone win the lottery. Buy and hold, only sell to spend. That's the only strategy you follow!
6. Exception to 5: if you like to gamble. :) There's nothing wrong with having a "fun" investment or two, as long as you know that they're a consumption good and don't really count on keeping them.