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Five Secrets to Tackle Your Fear of Investing

Courtesy of USAA
At some stage, most of us put off investing. We know we should do it. But it seems so complicated. And sometimes the payoff feels a long way off.But don't wait. Tackle these five common fears to begin investing at any age.
1. Fear: "I have no idea what I’m doing."
There's an easy way to get started without having to choose stocks. An index fund allows you to own some of America's top companies — names like Microsoft, Exxon Mobil and General Electric. These funds make it easier to take advantage of broad market opportunities and invest in sectors such as technology, health care, financials, and telecom — without you owning individual stocks.
2. Fear: “I need every penny of my paycheck.”
With that attitude, you could find yourself in real trouble when your working days are over. Take time now to find out how contributions to retirement funds have the potential to grow. If you're offered a 401(k) or 403(b) retirement fund at work, put money into it —especially if you get matching funds from your employer. Start small. Begin with, say, 3 percent. But by age 30, most investors should try to get to 10 percent. If your employer provides matching funds, even if the match is only 25 cents for every dollar you invest, it's like getting free money. Don't walk away from it.
3. Fear: "The jargon sounds like another language."
There are ways to learn the lingo. Read well-respected and balanced financial magazines — Money or Kiplinger's Personal Finance or visit Web sites such as the American Association of Individual Investors and the Alliance for Investor Education.
4. Fear: "I might need the money now."
Or, you might not. You’d do better by setting some goals. Jot down your reasons to save and invest, advises Jane Bryant Quinn, author of "Smart and Simple Financial Strategies for Busy People" and a Newsweek columnist. Specify roughly when you'll need the money from your investments.For instance, consider keeping money you'll need within five years in a money market fund, bank certificate of deposit, or a short-term bond mutual fund. Put money you won't need for 10 years or more into mutual funds that invest primarily in stocks.
5. Fear: "I don't want to lose all of my money."
No one does. That’s why it’s a good idea to diversify with mutual funds.Mutual funds offer an easy way to buy stocks and bonds. By spreading your money over a wide variety of investments, you potentially reduce the risk of any one item significantly hurting you.


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