Dr. Dean is still away and Average Joe’s last guest post didn’t kill the blog? Let’s try again! Average Joe can be found most days at the crazily named “Average Joe’s Money Blog” and is the co-host of the wildly popular* 2 Guys and Your Money podcast.

(*that’s how his mom advertises it to her friends.)

Investing 101: Getting Started

Back in “the day” when I was an advisor, one of my clients worked in sales for Microsoft. He told me once that whenever he’d get on a plane and the person next to him asked what he did for a living, he said “I’m a baker.” It was much easier than saying what he really did; if he told the truth he’d either get a two hour diatribe about how Microsoft is the evil empire or he’d be asked for computer fix-it tips.

No thanks. Every job has a downside, doesn’t it?

Here’s what stunk about being a financial advisor. Once people realized that you weren’t out mining for clients…and were in fact AVOIDING the topic because you had more than enough business coming in, you became a hot commodity.

Brief Aside: I think rule #1 of life as an advisor was that when you needed business nobody wanted you, but when you really didn’t need a new client to survive, everyone beat your door down.

Funny how that works.

So, here’s what stunk: I’d go to a party with my spouse, hoping to have a good time and relax. Some well-meaning person would corner me and want personal financial advice over drinks. After this happened a few times, I wanted to begin telling people I was a baker, too.

I love the question: how do I start? I just didn’t much care for the free-advice-at-party aspect.

How about free advice at the Millionaire Nurse Blog, though?

Much better.

Here are Joe’s “How to Start Investing” Tips:

1) Start with an emergency fund. I know. Boring, huh? But investing means that you’re about to embark on a journey fraught with risk. During the times the investment “sea” is stormy, you don’t want to have to touch your funds. An emergency fund allows you to invest in peace.

2) Invest toward your goals. I often hear people say “start with an IRA or your 401k plan.” What if your goal is a new house? kid’s education? Neither of these investments makes much sense for these goals (although a Roth IRA might be a decent college fund…but we’re getting ahead of ourselves….)

3) Pick investments that fit your time-frame. Avoid investing in someone’s hot stock tip unless it fits your goal. Stocks are great for 7 – 8 years or longer. Bonds are good for goals of 4-8 years. Precious metals or real estate? You should have over 10 years until you need that money.

4) Think about liquidity. If you like real estate, realize that you can’t just sell off a bathroom when you “need a little cash.” Houses may take months to sell. Gold is five times more volatile than the stock market. Imagine you’re landing a plane as you get close to your goals. Carefully move money from more locked-in or aggressive investments to safer spots.

5) Remember tax shelters. Sure, I said earlier that your 401k or an IRA might not be the best place to start, but it is if your goal is retirement (and retirement is after age 59 1/2). You’ll save a bundle of money on taxes if you use available shelters. This is like a free return.

Those are my five best tips. If I had a sixth tip, it’d be “don’t tell people what you do at a party unless it’s something you’re comfortable discussing for an hour”…but that’s not a financial tip. Just straight-up advice from one friend to another.

Reader Questions:

What are your best basic investment tips?  And don’t say buy low, sell high, that’s my job!!!

Average Joe

{photo credit: alan cleaver c.c.}

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