Investing in Your 20s & 30s For Dummies, 3rd Edition

Chapter 17

Ten Essential Tips for Investing Success

IN THIS CHAPTER

Making the best investing decisions

Fitting your investments into your overall planning

Investing appears to be complicated and complex. But if you can take some relatively simple concepts to heart and adhere to them, you can greatly increase your success.

In this chapter, I present my ten favorite, time-tested principles of investing success. Following these principles will pay you big dividends (and capital gains) for many years to come.

Regularly Save and Invest 5 Percent to 10 Percent of Your Income

Unless you enjoy a large inheritance, you should consistently save 5 percent to 10 percent of the money you’re earning. When should you start doing this? I say, as soon as you begin earning money on a regular basis.

Preferably, invest through a retirement savings account to reduce your taxes and ensure your future financial independence. You can reduce both your current federal and state income tax (on the contributions) as well as these ongoing taxes (on the investment earnings).

The exact portion of your income you should be saving is driven by your goals and by your current financial assets and liabilities. Take the time to crunch some numbers to determine how much you should be saving monthly.

Understand ...