How the Online Trading Academy Works

Eyal Shahar simply wasn't the type of person who could stand being a passive investor, just putting money into an individual retirement account (IRA) or 401(k) and expecting good things to happen. After a successful stint as a diamond importer, Shahar decided to sell his business in 1990 and open a day trading company where he worked with several traders to invest the capital he had accumulated through the sale of his import business.

Naturally, Shahar wanted the traders -- who earned a cut of every dollar they made -- to be as profitable as possible. So at the end of each trading day, they gathered together and shared what happened; those who did well explained how and mistakes were identified by those who hadn't fared as well [source:Harkey].

This collective learning forum worked perhaps too well, since many of the traders Shahar hired left to invest their own money. However their leaving led Shahar to an insight -- and a new business, the Online Trading Academy, which Shahar founded in 1997 in Irvine, Calif. "What he concluded was he's better at teaching people how to trade than running a day trading floor," says Tony Harkey, the vice president of marketing at the Online Trading Academy. "So he decided to change the business and focus on educating the average individual investor or trader how to trade like a professional."

Thus the Online Trading Academy was born, a business that has grown from one brick-and-mortar location in California to 38 locations around the world -- including cities like Vancouver and Toronto, as well as Singapore and Mumbai -- with plans to expand to Jakarta, Indonesia and Hong Kong [source: Harkey].

Each location is an individually owned franchise that receives support in the form of marketing and other services from corporate headquarters in California. Using the original lessons generated from the teaching sessions at the end of each trading day as the foundation of its curriculum, the Online Trading Academy offers a wide variety of courses in trading different financial instruments, such as options, foreign currency and stocks. The company has offered its instruction on how to trade like a professional to around 20,000 students -- many of whom express great satisfaction with what they've learned -- though both the Securities and Exchange Commission (SEC) and other investment professionals urge great caution to individuals considering trading, warning that losses can be steep and quick (more about that later).

Keep reading to find out exactly what trading is -- and isn't.

What is trading, anyway?

For many people, the guiding principle of successful investing is "buy and hold." The logic behind the strategy is basically this: The market for stocks, bonds and other financial instruments is inherently volatile over the short-term, which means that investments can fluctuate in value from day to day and week to week in such a way that those movements can expose someone buying and selling over a truncated timeframe to substantial risk. Those who advocate a buy-and-hold investment approach, however, argue that long-term investing allows investors to take advantage of the overall historic trend upward in the market while avoiding the gyrations and risk apparent in the short-term movements of the market.

Active investors, on the other hand, see an opportunity for profit in those short-term movements. Rather than purchasing a mutual fund, which contains a basket of securities, and holding it for a long period of time, active traders buy and sell individual financial instruments with the belief that they can anticipate whether they will go up or down, thus enabling them to profit from that movement. The concept is that it is possible to gauge market trends in such a way that allows individual investors to make larger profits than would be possible from using a buy-and-hold approach.

There are many so-called active trading "styles." Day trading is probably the best known, and many people mistakenly believe that day trading is the only kind of active trading. As the name indicates, day trading involves an investor buying and selling securities in the course of one trading day; for example, a day trader who buys a share of Exxon-Mobil in the morning will sell it by the end of the day. In other words, day traders do not hold onto securities overnight or, in trading parlance, it is said that they do not hold onto a "position" from one day to the next. There are other active trading styles, each of which involves different time horizons and strategies. Other active trading styles include swing and position trading and scalping.

Active trading became especially popular during the dot-com boom of the late 1990s, fueled both by the seemingly inexorable rise of just about all stocks, as well as the proliferation of Internet access allowing individuals to buy and sell stocks easily. Not surprisingly, an entire industry has swelled up around servicing individuals interested in trading. Companies like E*TRADE and Charles Schwab, for instance, not only provide traders the necessary access to markets for buying and selling securities, but also boast of having the in-depth research tools needed to trade profitably. Countless books and magazine articles and newsletters -- not to mention TV shows like Jim Cramer's "Mad Money" -- provide an avalanche of tips and strategies for beating the market.

Click ahead to read about who attends the Online Trading Academy and what they're learning.

Online Trading Academy Information

Before he came across the Online Trading Academy, Gordon Peldo had never done any trading. "I was an investor. I had a 401(k) and stocks," he says. "I was with Gulf Oil Corporation and bought their corporate stock." But Peldo, who lives less than 10 miles from Online Trading Academy's corporate headquarters, decided that he wanted to start trading in 2006. "Because of the action," he says.

But Peldo, who is now retired, knew he wanted to educate himself as much as possible before he actually started putting his hard-earned money at risk [source:Peldo]. He came across the Online Trading Academy on the Internet, went to a presentation and signed up on the spot. Five years later, it's a decision he doesn't regret. "I'm making money," says Peldo, who is a day trader. "I show a net profit month after month."

In many respects, Peldo is a fairly typical Online Trading Academy student. Although Harkey, the company's vice president of marketing, says that it has had male and female students of all ages, fully 70 percent are men and the average age is 60 [source: Harkey]. "A lot of students discover us because they retire and have life savings and time to think about how to make their money work better for them," he says.

Like Peldo, many Online Trading Academy students have little or no experience with trading. Even if they do, they want to do it better and more profitably. At least that is the notion that drives the company's advertising. "I target people who are actively consuming information to improve their investing or trading performance," says Harkey. These sorts of people, he says, can be reached by advertising on CNBC, Bloomberg Radio, stock picking services, newsletters and other venues offering information about better trading and investing.

Those who, like Peldo, attend a workshop sponsored by the Online Trading Academy and subsequently sign up for courses typically take a seven-day Professional Trader Course first. Other classes offered run the gamut, including ones on trading futures, options, commodities and many others. The academy also offers what it calls the Extended Learning Track, which gives students the opportunity to participate in live online tutorials with instructors and other students where they explore market trends and try to identify trading opportunities [source: Harkey].

Regardless of the classes taken, students do not earn any sort of degree or certificate that has any use infinding a job; it's all about managing one's own money more effectively. And the courses aren't cheap: They average about $1,000 per day, although students are allowed to retake courses as many times as they'd like for the rest of their lives at no additional cost.

Read on to learn about the teachers and their approach.

The Teachers and Their Philosophies

The Online Trading Academy has around 60 instructors worldwide. In order to qualify to become an instructor, says Harkey, an individual must be able to document at least two years of profitable trading experience. Some of the teachers, he says, come from trading floors at places like the Chicago Mercantile Exchange while others are actually former students.

No matter the background of individual instructors, the core philosophy each imparts is the same -- that a buy and hold investing mentality is mistaken and that there are opportunities for profits if one can identify the factors that cause markets to rise and fall. Although many students, like Peldo, are interested in day trading, Harkey contends that the skills learned in classes are applicable for investing over any time horizon and any asset class.

On a tangible level, students learn how to use the TradeStation Platform, which allows direct access to markets -- as opposed to trading via an online brokerage service. But those who attend also learn how to identify "market turning points," which Harkey says provide opportunities for profits. "At the simplest level, if more people are buying than selling, then prices go up. If more people are selling than buying then prices go down," Harkey says. "Identifying the points at which there's an imbalance of buyers and sellers and the price or market direction is likely to change is the point at which there is a buying or selling opportunity."

The initial Professional Trader Course involves a weekend of lectures, where teachers attempt to show students how to identify those turning points through studying stock charts and other tools while also imparting a so-called rules-based methodology for guiding their trading [source: Koomey]. For the remainder of the course, students do actual trading using Online Trading Academy accounts, giving them the chance to implement what they have learned while still under the guidance of an instructor.

Is the Online Trading Academy a scam?

Online Trading Academy alum Gordon Peldo no doubt sums up exactly what every individual investor and trader is looking for when they decide to go it alone in the market. "There isn't a trader alive who isn't looking for the Holy Grail," he says, meaning a can't-miss approach to being consistently profitable. But whether such a Holy Grail exists or whether it's worthwhile to even consider trading at all -- let alone to fork over the thousands of dollars to get trained at the Online Trading Academy or anywhere else -- is questionable given the amount of research and study that shows active trading to be a losing proposition. Indeed, Larry Swedroe, the author of numerous books on investing, including the upcoming "Investment Mistakes Even Smart People Make," puts it bluntly. "Only a fool would do it," says Swedroe, who is also a principal and director of research for the Buckingham Family of Financial Services.

In particular, Swedroe points to wide-ranging research conducted by University of California professors Brad Barber and Terrance Odean, including their recently published study, "The Behavior of Individual Investors." In a nutshell, Barber and Odean found that individual investors do just about everything wrong: They underperform standard benchmarks, like low-cost stock index funds even before the costs of trading, such as commissions, and taxes are factored in; they sell profitable investments while holding onto losers; and they are overly influenced by past performances and tend to hold undiversified portfolios that have more risk [source: Barber and Odean]. "[Barber and Odean] found that people who traded the most -- day traders going online -- underperform the market by 10 percent per annum on a risk-adjusted basis," Swedroe says. "They're earning the equivalent of a non-interest checking account with all of the risks of stocks."

Nor do investment and trading success correlate with intelligence, says Swedroe. In fact, in his book "The Quest for Alpha," Swedroe talks about the woeful performance of an investment club made up of the high-IQ members of MENSA. Over a 15-year period, the club underperformed the S&P 500 stock index by 13 percent. "They should have had a book club," he says.

Swedroe cautions those who are interested in active trading to consider who else is in the market. Swedroe says that 90 percent of trading is done by institutional investors such as pension and hedge funds and just 10 percent by individuals, which means that most of the times individuals are buying or selling a security, there isn't one person on the other side of the trade but rather an institution. "They only sold that stock to you because they think it's going to underperform and you think it's going to over-perform," he says. "Looking at yourself in the mirror, who do you think is likely to be right?"

By no means is Swedroe the only person cautioning against active trading. The U.S. SEC has a publication titled "Day Trading: Your Dollars at Risk," which enumerates all of the reasons this sort of active investment is a bad idea. "Most individual investors do not have the wealth, the time, or the temperament to make money and to sustain the devastating losses day trading can bring," writes the SEC. Among the points the SEC makes are to doubt any claims of easy profits from trading, and to be leery about the objectivity of any so-called "educational" classes, seminars and books about trading because the people behind them stand to profit from you [source: SEC].

All of this is to say that despite the fact that Online Trading Academy has plenty of satisfied students -- although some prospective students have complained online about high-pressure sales tactics -- it is always wise to carefully consider whether trading is the right investment approach for your bank account [source: Ripoff Report].

Sources

• Anderson, Thomas. "Our Man Goes Undercover and Tells All." Kiplinger's Personal Finance magazine. March, 2010. (Oct. 5, 2011) http://www.kiplinger.com/magazine/archives/our-man-goes-undercover-and-tells-all.html#ixzz1ZNSQYUoI
• Harkey, Tony. Vice president of marketing for Online Trading Academy. Personal correspondence. (Sept. 29, 2011)
• Koomey, Chris. Owner of Baltimore and Washington DC Online Trading Academy campuses. Personal correspondence. (Sept. 29, 2011)
• Odean, Terrance and Barber, Brad. Professors in University of California system and authors of numerous papers on individual investing, including "The Behavior of Individual Investors." Social Science Research Network. Sept. 7, 2011. (Oct. 9, 2011) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1872211
• Online Trading Academy. http://www.tradingacademy.com/about-us/ (Sept. 27 - Oct. 9, 2011)
• Peldo, Gordon. Online Trading Academy student. Personal correspondence. (Oct. 5, 2011)
• Ripoff Report. Complaints about Online Trading Academy. http://www.ripoffreport.com/directory/Online-Trading-Academy.aspx (Oct. 6, 2011)
• Securities and Exchange Commission. "Day Trading: Your Dollars at Risk." (Oct. 7, 2011) http://www.sec.gov/investor/pubs/daytips.htm
• Swedroe, Larry. Author of "Investment Mistakes Even Smart People Make" and numerous other investment books. Personal correspondence. (Oct. 7, 2011)

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Online Trading for Beginners

The ability to buy and sell stocks can be a lucrative endeavor. Having the foresight to recognize market conditions so that you know when to buy low and sell high has made many people money. Some people choose to do this as their primary means of support, while others use stock trading as a way of building a stable nest egg for retirement. Regardless of your intentions or investment strategy, you can find that the internet makes managing your portfolio much easier, and allows you to respond quickly to changing market conditions.

Instructions

1. • 1
     Select an online trading site to use. Although trading online allows you to buy and sell stocks without using a broker, you still need to have access to a network that can carry out your trading commands. Etrade, Scottrade, TD Ameritrade and Charles Schwab are the largest online trading sites. Links to each of these websites can be found in the Resources section, below.
   • 2
     Fund your account. Follow the account funding instructions that are given to you at the time you open an account with the online trading website of your choice. Funding options typically include bank transfer, checks and cashier's checks. It is important to fund your account as soon as possible so that you will have money available to buy stocks with.
   • 3
     Research the stocks you are interested in. You will want to judge both their long-term performance and the short-term trends that the company is currently facing. The specific stocks you choose will depend on your investment strategy. You will need to decide between a passive or aggressive investment strategy. A passive strategy is much safer, but takes a long time to earn a profit. An aggressive strategy has faster payoffs, but is also a high-risk way of investing.
   • 4
     Set a buy order for the stocks you are interested in. Rather than constantly checking the price of the stock, you can set a buy order that tells the system to automatically buy a certain number of shares whenever the stock drops below a specific price. When the stock reaches your target price, the online trading website will automatically purchase the number of shares you have instructed the system to buy.
   • 5
     Establish a sell order for the stocks that you own. A sell order is similar to a buy order. With a sell order, you are telling the system to automatically sell a specific number of shares whenever the stock reaches the value that you establish. This allows you to automatically execute a profitable trade without having to constantly monitor the value of your stocks throughout the day.

Tips & Warnings
Keep in mind that you will be charged a fee on each trade that you execute. This means you will be charged a fee when you buy a stock, and when you sell it. You will need to make sure you sell your stock at a rate that will be profitable enough to offset these fees and still earn a profit for you.

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Top 10 Ways to Make Money on the Internet

Unless you're a freegan and have found a way to live entirely off the grid, you probably need some sort of steady income in order to survive. The traditional way to earn money, of course, is by having a job. You work for a company or start your own, and the work you do earns you money, which you spend on things like a mortgage, rent, food, clothing, utilities and entertainment.

Most people typically work from their company's central location, a physical space where everyone from that organization gathers to exchange ideas and organize their efforts.

But a few lucky souls have found ways to make money within the comfort of their own home. With the Internet, an ever-changing arena for businesses, some people looking to earn money are finding ways to do so. Some forms are best for part-time endeavors for those looking to make a little extra money on the side, while others can lead to full-time jobs and Internet success stories.

We've put together a list of our top 10 ways to make money on the Internet, in no particular order. On the next page, we'll start with an old favorite.

1. Selling Stuff on eBay

Most people today are familiar with the concept: You have things you don't necessarily need but others are willing to buy, and you can auction off the items on eBay or other online auction sites. Simply gather your goods, create a seller's profile and start selling.

It sounds simple, but it takes some practice to sell successfully. Creating persuasive and legitimate product pages for the goods you're selling will help get buyers interested. It's also important to set reasonable minimum bids to ensure that people will buy. And remember to deliver the kind of customer service that will garner positive feedback ratings and to communicate with buyers to let them know you're reliable. The more positive feedback you receive, the more people will be willing to do business with you. And that, of course, means more money.

2. Blogging

If you have a particular passion for something, whether it's a hobby or an obsession, and you have something to say about it, blogging could be a profitable way to pour out your endless stream of thought. The key here, as with many other services on the Internet, is in selling advertising.

After starting up a personal blog, many writers sign up for ad services like Google AdSense, which post those familiar sponsored links you often see at the top and on the sides of Web sites. The more times your blog readers click on those ads, the more money you'll make through the ad service. This works fine if you're a casual blogger, and you may make some extra spending money. But if the blog is consistently interesting, well-written and really takes off, you may be approached by companies who want to reach your fan base with graphical advertising around your blog. Some of the more successful blogs, like I Can Has Cheezburger? and Boing Boing, have become pop-culture phenomena, and their creators have been able to quit their day jobs and blog full time because of the money they make from advertisers.

3. Designing and Selling T-shirts

A you walk around most high school and college campuses, you're likely to come into contact with lots of words. But it won't be material from textbooks or term papers -- those are probably in backpacks or sitting unfinished at home. Instead, they're the simple phrases or logos -- most of which are ironic or amusing -- printed on the T-shirts on the backs of the students.

Usually, the more unique and offbeat the design is, the more desirable the T-shirt is. The growth of the Internet has made it possible for vendors to sell T-shirts all over the world. In fact, sites like CafePress.com and SpreadShirt.com allow you to set up your own store, create your own designs and sell them yourself. If you can create your own shirt design with a clever catchphrase or come up with your own unique statement and people like it, you can start making money.

4. Freelancing

Freelancing is similar in some ways to blogging. For one thing, you get to work from your own home or office most of the time. But there are a few important distinctions. First, if you're thinking about freelance writing, chances are you need to have more experience than the average blogger. Many freelance writing positions cover specialized topics for online publications and many require expert knowledge on the subject. However, if you're passionate about things like travel or food and know how to write, a freelancing job can provide you with a good income.

Along a similar line, you might also consider self-publishing your original work rather than working on contract-driven tasks. Self-publishing offers many of the same benefits as freelance writing. This additional step is risky, though, because it requires marketing work to your target audience so they'll buy your work.

Writing's not the only way to make money freelancing, of course -- anyone with graphic design or programming experience can find contract jobs that pay well and provide challenging work, too.

5. Domain Name Flipping

Based on luck, strategy and business savvy, domain name flipping can be one of the more lucrative ways to earn a living online. The term comes from the real estate trick that involves buying old, undervalued houses, fixing them up to make them more attractive and modern-looking and selling them for a much higher prices.

In this case, the old and outdated place is not a house, but rather a domain name -- the main address for a Web page. With a little bit of searching, dedicated domain flippers locate unused, poorly maintained Web sites that have generic and recognizable identifiers and buy them. They usually pay a few hundred or even a few thousand dollars, but after extensive updates that make the site more business- and user-friendly, the domain name can fetch several times more than it was originally worth. The domain bird-cage.com, for instance, was bought for a mere $1,800 in 2005 -- after a redesign two years later, the site was sold for $173,000 to a bird cage vendor [source: Bhattarai].

6. Financial Services

Financial services include accounting, tax preparation, bookkeeping and payroll processing. Today, you can accomplish most of these services using specialized software. For businesses, this means hiring fewer people to handle these tasks. For individuals, it means doing it on their own and hiring a consultant online when necessary.

These cost-saving opportunities for consumers mean money-making opportunities for you. You can create a Web site on your own or work with an existing Web-based services group. Then, you can correspond with clients through that Web site and via e-mail.

If you want to offer financial services over the Internet, first make sure you're either trained or experienced in the services you're planning to provide. For example, you're probably not an expert on preparing taxes for a small family farm unless you've done so before or had training in farm-related accounting. In addition, make sure you know whether you'll need government licenses to offer certain services, and refrain from misrepresenting yourself or working illegally to avoid getting sued for fraud.

7. Customer Service

Many businesses support their products through a customer service department. In many cases, this means people who answer phone calls from customers. A growing number of businesses also offer customer service electronically through their Web sites and by e-mail.

At a Web site, customer service might include live chat sales and support. To use this, a customer clicks a link requesting to chat with a live person, and a customer service representative answers the request and speaks with the customer through a chat window. For e-mail customer service, the customer fills out a form at the Web site or sends e-mail directly to a particular address.

Since the live chat and e-mail depends only on having a reliable Internet connection and Web browser, businesses have looked increasingly at hiring home-based workers for these services. As a result, customer service contracting firms like Talk2Rep cover e-mail and live chat support in addition to inbound and outbound phone calls. While the pay rate is often minimal or commission-based, the growing demand for online customer service makes it a reliable source of income if you have a knack for it.

8. SEO Reviewing

Search engine optimization (SEO) is a growing area for Internet-based employment. SEO is a means of improving the results from a search engine so that they represent the closest matches and most reliable resources for the user's desired results.

As a contract SEO reviewer, working through a company like Leapforce, you can aid in this optimization. You start each evaluation task by judging a user's intent based on the key word combinations provided and your own knowledge of popular culture in the user's locale. Then, you use a set of given guidelines to evaluate how particular search results match that user's intent.

SEO reviewing can offer a steady income from home, but there are some risks. First, an SEO reviewer has to run reliable antivirus software and have a good, strong defense against malware. That's because viewing certain Web sites during evaluation tasks could introduce malware to the computer. Second, an SEO reviewer must be willing to view potentially offensive material, such as pornography. As a reviewer, you may be asked to check whether a given site contains malware or pornography, so you're putting your computer at risk as part of the job description.

9. Tutoring

With each passing year, there seems to be increasing pressure for elementary, middle and high school students to make good grades and prepare for a path to higher education. For some kids, this means getting help from a tutor to bridge any gaps in understanding in certain subjects.

Since more families often have reliable high-speed Internet connections at home, too, Internet-based tutoring services are growing. When you apply for these jobs, you usually have to take tests in your selected subject areas and submit to background checks. Though you could start your own online tutoring service, sites like Tutor.com have already done the legwork for you in terms of marketing. These sites match thousands of kids with tutors each week.

While many Internet-based jobs offer flexible hours or multiple shifts, tutoring services might require you to be online during a specific block of time or reward you for doing so. This encourages tutors to be available during the heaviest demand. For example, when Tutor.com has more tutors than tutoring requests, it places tutors on a waitlist and gives preference to tutors who work at least five of hours per week in the 4 p.m. to 11 p.m. EST time slot Sunday through Thursday [source: Tutor.com].

10. Selling Handmade Goods

Sites like Etsy provide an easy setup option for creative types who want to sell their wares online. Setting up and maintaining a shop is simple.

Screen capture by HowStuffWorks staff

Earlier, we considered using sites like eBay to sell stuff that you don't need. You can also use Web sites to sell your original creations. Certain Web sites like Etsy.com and ArtFire.com are dedicated to matching the artists who create things by hand with the customers who appreciate and want to purchase their handmade goods.

If you're like most people, the word handmade probably brings to mind some traditional crafts like knitting, crochet, needlework, quilting, painting and sculpting. Handmade items don't stop there, though. You can also market woodworking, glasswork, metalwork and anything else you're capable of building at home. Be sure to focus on projects that you're already good at or that you have a passion for so you don't burn out producing each new item.

Existing Web sites like we mentioned before usually let you set up your own shop for free or for a very small fee for each item you list there. If you have a small home-based operation, this could be a better deal than setting up your own site. For many people, hosting and managing an entire Web site might be a full-time job by itself.

The biggest challenge for selling homemade goods is making back the cost of what you put into it. Not only do you want to be reimbursed for materials, but you also want to be paid proportional to the time you put into it. Keep track of your sales and purchases carefully in the first few months, and make adjustments as necessary to maximize your profit.

Now that you have our 10 ideas, click on over to the next page for even more information on ways to make money on the Internet.

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10 High-paying Dirty Jobs

The people with these jobs have to be willing to get their hands dirty.

At some point in our lives, most of us have probably seen a task so revolting that we've admitted, "You couldn't pay me to do that." But not everyone feels that way. If a job needs to be done, chances are you can find someone to do it -- especially if the price is right.

Whether it's cleaning up human excrement or taking care of the dead, many people are willing to pay enough money not to do it, and they'll gladly pass the buck. Although most of us would rather live in blissful ignorance of what goes on in these nasty but necessary jobs, finding out the grisly details might send us thanking our lucky stars for our cushy jobs. On the other hand, taking a peek into the paychecks might have us considering a career change. If you're willing to get your hands dirty, you'll be able to rake in a nice living, in many cases for only a few months of work out of the year and without a college degree.

A dirty job may mean working with stuff that grosses most people out, but you can make a decent amount of money and you may also be happier with it. Some studies show that jobs with hands-on, manual activities make people happier than office jobs [BBC NEWS]. In the movie "Office Space," the main character despised life as an office drone and finally finds happiness in a lowly construction job.

If you want to make a nice living but dread mind-numbing office work and fluorescent-lit cubicles, one of these jobs might be a perfect for you. But check a weak stomach at the door: These jobs entail revolting, dangerous and sometimes psychologically disturbing duties. First, we'll do a Dumpster dive into the life of a garbage collector.­

A NOTE ON SALARIES PAY VS. HOURS

It's notoriously difficult to compare salaries among different jobs. Although a teacher might make $40,000 for working nine months out of the year, how does that stack up to an office job that makes $50,000 for 12 months of work? So when comparing salaries, keep in mind that a lot depends on experience, location, hours and intensity of work.

1. Garbage Collector

All in a day's work: a garbage collector cleans up our streets.

Most of us wash our hands of garbage as soon as we set it on the curb. If we can avoid the chore of taking the trash out, we toss our rubbish in the trash can and forget about it. Not so for the garbage collector.

If you've ever noticed an overflowing trashcan on a public street, you may have taken a moment to feel bad for the person who'll have to clean it all up. In the pinnacle of dirty jobs, garbage collectors have to deal hands-on with our trash, day in and day out. In this thankless job, they make sure it gets from our curbs to the landfill. Sanitation workers often put in long shifts, traveling up and down our streets to pick up trash while dodging impatient drivers -- who occasionally hit the guys who are emptying trash cans. That's one reason why trash collecting consistently ranks high on lists of dangerous jobs [source: Morsch].

Aside from angry drivers, these guys deal with forces of nature as well -- working in rain, snow and sleet. And let's not forget the smell. The reek of dirty diapers and rotting eggs can't be pleasant, especially combined with -- and particularly after -- stewing in the sun on a hot day. Even if sanitation engineers eventually get used to the smell, it probably doesn't make them popular after working a long shift.

Despite the dirt, the danger and the smell, there's no shortage of garbage collector jobs. The average annual salary for this occupation is about $43,000 [source: SimplyHired]. In California, the average hourly wage is $16.04, and in some places, the overtime can help shoot the pay to over $60,000 a year [source: CEED,Parsons].

2. Gastroenterologist

Nobody's happy to be visiting a gastroenterologist.

Sometimes the hardest tasks have to do with looking within ourselves. And we're not talking about soul-searching. Whatever we eat goes through a 25-foot (7.62 meter) journey in our digestive tract, and when problems arise, there's one kind of doctor we can go to for help -- the gastroenterologist -- also known as a GI doctor. These doctors specialize in the process that most of us wish would remain mysterious -- the body's digestion.

Nobody likes to talk about or describe their digestive problem. Whether it has to do with gas, abnormal stools or a pain in the rear, GIs diagnose and treat some of the most uncomfortable and embarrassing of ailments. So you can bet that the GI's patients aren't always happy to see him.

On top of it all, it's not easy to become a GI. These doctors have to go through four years of medical school, three years of residency and two to four years of a fellowship to become full-fledged gastroenterologists [source: AGA].

Why put yourself through so much grueling training for what's sure to be an aromatic job? Well, if helping people isn't enough of an incentive, it doesn't hurt that GIs make a handsome salary. Most GIs make between $250,000 and $400,000 a year -- not too crappy [source: Salary.com].

3. Oil Rig Worker

Many oil rig workers live on a drilling platform in the middle of the ocean.

To say that oil is a booming industry would be an understatement. Given that modern economies largely depend on it, and as prices soar, you can bet that companies will pay a lot to find and drill for this black gold. But for most workers, striking oil isn't so glamorous in real life. Daily life on an oil rig is dirty and dangerous.

Offshore rig life is especially difficult. It involves spending weeks at a time sleeping, eating and working 12-hour days or nights on a man-made drill rig in the middle of the ocean. Aside from the cramped conditions, heavy machinery and explosive materials make this a perilous job that requires hardhats and steel-toed boots. And the business side of oil drilling isn't the only part that's booming -- the machinery is extremely loud. Workers are typically required to wear earplugs on the job to prevent permanent hearing loss, and they communicate through hand signals.

But if you can stand the strenuous work and the time away from home, you'll be sitting pretty. Even lowly workers can get a nice annual pay over $40,000 [source: Miller]. Salaries can skyrocket for people with certain college degrees and for overseas work [source: OilJobFinder].

4. Portable Toilet Cleaner

This job is a sort of combination of garbage collector and GI, and arguably more disgusting than both put together. Although most people in polite society methodically avoid situations where they need to use a portable toilet, modern outhouses can be lifesavers. As gross as they can be, they'd be worse without the folks who clean them for a living.

Using a tank and a vacuum wand, cleaners must suck up all the waste in a portable toilet. After picking up any stray toilet paper, they also wash down all surfaces that c­ould possibly be soiled, including the walls. This is when a high-pressure hose comes in handy [source:Douglas]. Usually, cleaning one portable toilet takes only a few minutes, and most workers clean from 10 to 60 of them a day [source:AOL]. But it's not always that easy: Portable toilets that tip over require more damage control.

Nevertheless, some cleaners grin and bear it -- and take home $50,000 a year [source: AOL]

5. Crab Fisherman

When most people think of fishing, they usually think of lazy afternoons on the lake and father-son bonding. It may come as a surprise, but fishing persistently ranks as the most deadly occupation in the U.S. [source: Christie].

If you've ever seen an episode of "Deadliest Catch," you probably have an idea of why that's true. Off the Alaskan shore, crab fisherman face freezing waters and storms that give way to gargantuan ocean waves. If the fishermen can protect themselves from being swept overboard in a storm, they'll still have to worry about the dangers of fishing machinery and coils on crab boats, which can also fling them overboard. And even if they avoid drowning, cold temperatures can give way to fatal hypothermia. These workers brave harsh conditions in shifts that can last as long as 21 hours to haul hefty catches [source: Miller].

But, as you might expect, the crab fishing industry is as lucrative as it is dangerous. For a few months of work out of the year, experienced workers can rake in about $60,000 [source: Miller]. It all depends on how successful the yield is for a particular boat.

6. Sewer Inspector

Rats, roaches, dark passages and the occasional corpse -- no, we're not talking about a day in the life of Indiana Jones. In a much less glamorous role, the sewer worker deals with all of this stuff and more while braving the depths of the hundreds of miles of sewers beneath our cities.

After we've done our business in the bathroom, all we have to do is flush our waste goodbye, and we'll never have to see it again. But this isn't the case for the people who take care of our sewer systems. Their job entails walking and sometimes crawling through sewer tunnels to inspect for cracks, clogs and other problems. As if wading through human excrement didn't sound bad enough, some workers are also sewage divers. As you probably guessed, they have to go all out to swim through sewage to clean out clogs. In addition to the excrement, smell, and creepy crawly bugs and rats, sewer workers sometimes come across dead bodies, both animal and human.

Before you write off these employees as nuts for voluntarily diving into human waste, note that, with above a high school education, they can make over $60,000 a year [source: Speer]. Many people consider sewer inspectors noble stewards of Mother Earth because they keep our water and our streets clean.

7. Coal Miner

Joining the ranks of garbage collecting and fishing, coal mining is also one of the most dangerous professions today [source: Alford]. Although mining has come a long way since "How Green Was My Valley" days, it remains a tough job.Coal mines contain methane, and explosions can occur when falling rocks cause sparks. What's more, unstable mines can collapse and kill workers.

Aside from these dangers, working directly with coal is literally dirty. Forget getting your hands dirty -- working in a coal mine will get your everything dirty. Coal dust coats all surfaces and contaminates the air. Just from breathing, coal miners ingest coal dust and sometimes develop black lung, a condition that causes shortness of breath and emphysema. Although improvements in mine ventilation have reduced the number of cases of black lung, it's still a problem [source: HealthAtoZ].

Nevertheless, even if it's covered in a film of black dust, money is still money. In West Virginia, where coal is a huge industry, coal miners earn an average annual salary of around $64,000 [source: Brook].

8. Embalmer

Most cultures have long and ancient traditions of funeral rites and special treatment for the dead. Some of these traditions include ritualistic attempts to preserve the body as much as possible. Whereas ancient Egyptians would mummify, many modern cultures embalm.

When a person dies, the body quickly becomes pale and unsightly. This doesn't make for a very pleasant experience when family and friends say their goodbyes to their dearly departed loved ones. That's where the embalming process comes in. It delays the decomposition of a corpse and cosmetically restores it to look presentable for the viewing. It also sanitizes the body to prevent spreading infection [source: Aurora Casket Company].

The details of embalming aren't pretty. It involves first washing the body with germicidal soap and massaging out stiffness. Then embalmers drain the blood and gases and inject disinfecting embalming fluid. Preparing the face involves securing the mouth shut with wires and the eyes shut with glue [source: Redwood Funeral Society]. Morticians can also beautify the body with makeup, manicuring and shaving. They also dress the body before the funeral for viewing.

Embalmers are exposed to toxic cleaning chemicals during the process and to diseases from handling the bodies. In addition to needing a rock-solid constitution in dealing with corpses, those charged with this brave task also have to switch gears and tactfully interact with the family of the deceased.

Embalmers, morticians and mortuary workers earn about $41,000 on average, and the pay rises with 

9. Plumber

For the modern American, the idea of living without indoor plumbing is unthinkable. Plumbing may be one of the greatest advances of society because it offers us significant comfort and convenience. No longer do we have to step outside to brave harsh elements of nature to get water from a well or to enjoy the privacy of the outhouse. So when pipes get clogged or spring a leak, most of us can't last long without calling in a plumber.

Plumbers have the quintessential blue-collar job, often having to crouch under sinks or through the crawl spaces under houses. If these cramped and dirty conditions aren't bad enough, they deal with our revolting clogs and waste or dangerously hot pipes. Customers commonly call with plumbing emergencies at all hours, making schedules unpredictable.

But despite the drawbacks, plumbers make a nice living, as even entry level plumbers typically pull in between $35,000 and $40,000 a year [source: Salary.com]. On average, plumbers make about $47,000 annually [source: CollegeBoard].

10. Crime Scene Cleaner

Talk about cleaning up after someone. In the aftermath of a bloody crime or the discovery of an illegal chemical lab, the police investigators rush in to save the day and bring the perpetrators to justice. But in the hurry to clean up crime in the city, police don't have time to clean up the walls. Be it blood and guts or hazardous chemicals, not a lot of people jump at the chance to be a crime scene cleaner.

Murders and suicides can get extra bloody. Throw in fragments of bone, gore and other body pieces strewn about the place, and you've got quite a mess. This job isn't for the faint of heart -- anyone who is prone to getting queasy or emotional won't succeed in this line of work. Developing stress disorders from this work isn't uncommon. It's also pretty dangerous. Even on days they don't have to deal with anthrax-laden labs, they do have to worry about getting infectious diseases from the body fluids. This means suiting up with hazardous materials protection gear.

Depending on how bad the mess is, the cleanup could take a few hours to a few days. But you won't hear these crime scene cleaners complaining too much -- they charge by the hour. With a little experience under your belt and flexibility with your work hours, you can easily make about $75,000 a year with this job [source: Sahadi]. Although you don't need a college degree to get a crime scene cleaning job, it can help boost that salary into six figures.

There's no doubt these past 10 jobs justify the old maxim, "It's a dirty job, but somebody's got to do it." Maybe the next time we see a garbage collector or meet a funeral home worker, we can tip our hats to them for doing the jobs that most of us couldn't handle for one day.

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How to Start Investing

When you're fresh out of college, planning for your financial future may mean brown-bagging your lunch so you can afford to go out to dinner with your friends. But after a few years of living paycheck-to-paycheck, you might be pleasantly surprised to see that your checking account balance is actually growing month by month. So what should you do with that extra $100 or $500? You could buy a Nintendo Wii, pick up the new iPhone, or you could invest your money.

Investing doesn't have to be scary. And it's not just for people with thousands of dollars in spare cash. In fact, the earlier you start investing, the more you can take advantage of the miracle of compound interest. The little you can start investing now could reap huge rewards 30 years down the line. Every good plan starts with a clear statement of goals. Where do you want to be in five years, 10 years or even 50 years? If you know what you want, a solid investment plan will help you get there.

B­ut first, you need to understand investment tools. Choosing a broker is a crucial part of your investment plan. An expert can give you guidance, but you'll pay for his or her advice. Whether or not you hire a broker, it's good to learn about investment strategies. Successful long-term investing isn't just simple guesswork. But it doesn't have to be rocket science either. There are some basic formulas that even new investors can use to maximize their returns year after year.

Armed with your new knowledge of stocks, bonds, mutual funds and investment strategies, you'll be ready to invest. In this article, we'll walk you through the basics of how to become a successful investor, explaining the safest strategies for making your money work for you.

Step 1: Set Your Investment Goals

Before you invest a single dollar, it's helpful to figure out exactly why you're investing. Here's how to start: Grab a piece of paper and list all of the things that you want to do in your life, focusing on those big moments that come with a price tag. Use time frames to help organize your goals and future plans.

Five years out, your plan might be to get married, have your first child and buy your first home in a nice neighborhood. Ten years out, maybe you'd like to have two more kids, which might mean a second car and a bigger house. Twenty years out, college tuition payments begin. And what about retirement?

If it seems like your future financial obligations are quickly adding up, don't get discouraged. That's why you're investing. The best thing you can do now is to be as specific about your future plans as possible, even if they're far off on the horizon.

Retirement is the perfect example. The amount you need to save for retirement substantially differs depending on when you plan to retire. If you want to retire early -- perhaps in your 50s instead of your 60s -- you may need to invest as much as 20 percent of every paycheck to have enough to live on for the remaining 30 or 40 years. If you plan to wait until age 65 in order to collect full U.S. Social Security benefits, perhaps you can get away with investing significantly less.

Keep in mind that not all retirements are created equal. Do you want to buy a home in Mexico and spend your golden years swinging away in a hammock? Or do you want to rent a one-bedroom apartment in midtown Manhattan and catch a Broadway matinee every Friday? Maybe you know that a full retirement isn't your thing. Perhaps you'd like to keep working, at least part-time, as long as possible. These are the kind of details that will determine your long-term investment strategy.

Now that you have your goals in place, it's time to familiarize yourself with the most common investment instruments.

AM I READY TO INVEST?

No one should jump into investing without a safety net. Before you start taking even conservative risks with your money, you need to establish a firm financial foundation that includes an emergency fund. Most financial experts suggest medical insurance for you and your family and at least six months of income sitting in the bank or in extremely low-risk accounts like CDs (certificates of deposit) and money market accounts [source: Kiplinger]. Once you've established this foundation, start with what you can spare -- as little as $25 a month.

Step 2: Learn the Different Types of Investments

Knowledge is power. Even if you don't plan on personally managing your individual investments, it pays to know the details about the most common types of investment instruments: stocks, bonds andmutual funds.

When you buy stock, you're buying partial ownership in a company. Stocks are sold as shares, and every shareholder is entitled to a percentage of the company's annual profits called a dividend. But most people don't buy stocks for the dividends. They buy them as long- or short-term investments.

The price of a share of stock is constantly changing. Stock prices go up and down based on the value of a company on paper and the perceived value of a company in the eyes of investors.

The golden rule for investing in stock is to buy when the price is low and sell when the price is high. This is easier said than done. Unless you have ESP, it's very difficult to predict when a stock has reached its lowest or highest price. The best you can do is invest in companies that you're sure are going to grow. For example, if Microsoft releases particularly weak sales numbers after Christmas, its stock price will probably go down. But since Microsoft is such a successful company, it's probably safe to assume that the price will rebound quickly and keep growing. This is an opportunity to buy Microsoft stock for a relatively cheap price and sell it later for a profit.

Historically, the stock market has grown on an average of between 10 and 12 percent a year. This is why many financial advisors consider stock an excellent long-term investment. The stock market is also attractive for short-term, higher-risk investors. With stock prices changing every minute, there's tremendous potential for a quick profit or an equally quick loss.

Another investment tool, bonds are considered some of the safest investment securities around. This is because a bond is essentially a loan. In this case, the investor is the one who's loaning the money. The most common bond is a Treasury bond or a T-bill. When you buy a T-bill, you're loaning money to the United States government at a fixed interest rate. You can also by bonds from local governments -- municipal bonds -- and businesses -- corporate bonds. Because bonds are such safe investments, they carry some of the lowest interest rates.

With a mutual fund, your money is pooled together with cash from thousands of other investors to buy aportfolio of stocks, bonds and other securities. A mutual fund is run by a team of professional money managers.

The advantage of mutual funds is that they give you instant diversity in your investments. For a beginning investor, it would be very expensive and time-consuming to make lots of individual stock and bond purchases, and we'll talk more about these fees later. With mutual funds, your money is invested in a balanced portfolio of stocks and bonds without incurring fees for each purchase.

Stocks, bonds and mutual funds are the most common investments, but certainly not the only ones. Real estate investment trusts (REITs) are companies that own and manage a portfolio of real estate properties and mortgages. By investing in an REIT, you're entitled to a cut of the company's profits. Stock futures are contracts to buy or sell a certain amount of stock on a specific date. You can also trade international currencies on the foreign exchange market known as forex. The list goes on and on.

But if you're just getting started as an investor, it's best not to leap into complicated, high-risk investment instruments. Stick with stocks, bonds and mutual funds for now and learn more about the other options as you go.

The person who will help you devise and execute your investment strategy is your broker. Let's talk about how to choose a broker in the next section.

Step 3: Choose an Investment Broker

To buy and sell stocks, bonds and mutual funds, you need a broker. A broker can either be an individual licensed agent or a brokerage firm like Merrill Lynch, Smith Barney or Charles Schwab. The most basic function of a broker is to execute trades for the investor, but many brokers offer additional services like investment advice and portfolio management. Brokers make money by charging commissions on each trade and collecting fees from investors.

It's important to understand how these commissions and fees work. First of all, most brokers require a minimum deposit in your brokerage account. It's similar to a bank account, and the broker will withdraw money from it every time he or she needs to make a trade. The average minimum deposit is between $500 and $2,500, but it's not uncommon for minimums to be as high as $10,000 [source: Investopedia]. If you can't supply the minimum deposit, you can't work with the broker, so look for that information first.

As we mentioned, brokers make money by charging a commission on each trade. The amount a broker charges varies greatly between discount and full-service brokers. Traditionally, discount brokers don't do anything but execute the trade. Many online brokers, therefore, are discount brokers. You fill out the details of the trade on the Web site, hit "buy" or "sell" and someone on the other end makes the transaction. Discount brokers can charge as little as $5 to $15 per trade.

Full-service brokers do much more than just execute trades. They're professional money managers andfinancial planners who work with a client to develop a clear investment strategy and maintain a portfolio that supports that strategy. Because full-service brokers do considerable market research and meet in person with each client, the average full-service commission is between $100 and $200 a trade.

In addition to commissions, brokers also charge annual maintenance and operating fees. Some brokers even charge inactivity fees if you go for months without making a trade. And others charge minimum balance fees if your brokerage account dips below a certain level or amount. Before working with a broker, make sure you understand what fees apply to your account and how they will be calculated.

As a beginning investor, it can be difficult to choose between a discount and full-service broker. Discount brokers are cheap, but you get what you pay for: A discount broker doesn't get paid to give you advice. On the other hand, not all full-service brokers are worth their hefty commissions. Some are arguably salesmen who only peddle their brokerage firm's investment products. As we discussed earlier, they get paid by the trade. Some full-service brokers have been accused of encouraging clients to make multiple, unnecessary trades, which is an unethical practice called churning [source: Investopedia].

The good news is that there's a new generation of online brokers that fall somewhere in the middle of the discount and full-service extremes. You'll pay between $15 and $30 per trade, but you'll get more guidance and support than from a traditional discount broker. And now some full-service brokers are offering discounted, online-only trades.

Once you have a broker, it's time to develop an investment strategy. Read more in the next section.

Step 4: Learn About Investment Strategies

There are some basic investment strategies that every beginning investor should understand before putting their savings on the line.

When you're building your first investment portfolio, your broker will probably suggest that you put most of your money in stocks. But if you read the financial page, you know that the stock market can take big dips and unpredictable jumps. Isn't putting so much money in stocks too risky? On one hand, you're right -- stocks are riskier than other investments like bonds or money market accounts.

But you're also confusing short-term volatility with long-term risk. The truth is that the stock market has always crept higher and higher over the long-term, even if there are a few rough years along the way. As a young investor, you can wait out those bad years. Kiplinger.com puts it this way: "Invest aggressively for the long-term and conservatively for the short term" [source: Kiplinger]. If you're putting money away for 30 years, go for stocks. If you're saving money for next year, put it in something ultra-safe, like a CD.

Another important principle of investing is something called dollar-cost averaging (DCA). The problem with investing in something like the stock market is that it's hard to know when stock prices are going to go up and when they're going to go down. And as a beginning investor, you don't have the time or money to waste responding to every slight market fluctuation.

DCA takes a lot of the guesswork out of investing. Every month, you invest the same exact amount of money -- whether it's $25, $100 or $500 -- in the same investment instrument. Let's use stocks as an example. Every month you buy $100 of Microsoft stock. When the price of Microsoft stock is down, that $100 will buy you more shares. When the stock price is up, the same $100 will buy you less shares. The result, over time, is that you end up buying Microsoft stock at an average price per share.

That average price per share is guaranteed to be better than anything you could have come up with by jumping in and out of the market, trying to guess when Microsoft stock had bottomed out and predicting sudden upturns. With DCA, "bad" months aren't really that bad, because you pick up more stock during those months to offset the "good" months when the stock price is back up. Even if you have a large lump sum to invest, like $10,000, consider breaking it up into 10 $1,000 investments spread over 10 months. It's much safer than trying to pick the exact right moment to invest everything at once.

Mutual funds are ideal for dollar-cost averaging. Many mutual funds allow investors to automatically deposit a set dollar amount each month. For beginning investors, this is perfect, because there's usually no minimum, and it's a great way to get into the habit of investing regularly.

But the real benefit of using DCA with mutual funds has to do with the fee structure. Most mutual funds charge a commission based on a fixed percentage of your investment, say 0.2 percent. So if you invest $50 every month in your mutual fund, you'll be charged 10 cents for the transaction. If you tried to do the same thing with stocks, you'd be charged $15 or $30 for that same $50 transaction, because stockbrokers get paid by the trade. So instead of paying 0.2 percent in fees, you're paying 30 or 60 percent.

In the next section, we'll explain how to build and maintain a balanced investment portfolio.

Step 5: Build Your Portfolio

Your investment portfolio consists of all of your individual investments in stocks, bonds, mutual funds, REITs and other instruments. The goal of any portfolio, whether you're just starting out or have decades of investing experience, is diversity. The idea is to invest in enough different sectors of the economy so that if one investment does poorly, your other investments will make up the difference. If you have too many of your eggs in one basket, you could end up magnifying your risk. A diversified portfolio spreads the risk evenly so that no single mistake will ruin everything.

As we mentioned in the previous section, the best investment strategy for new investors with limited funds is to invest in mutual funds using dollar-cost averaging. This allows for regularly scheduled, modest contributions without incurring substantial fees. The great thing about mutual funds is that they come in all flavors, meaning it's relatively easy to pick and choose a handful of mutual funds to create a diversified portfolio.

For most Americans, a diversified portfolio should include investments in five major areas

• United States-based stocks (both large and small companies)
• foreign stocks
• bonds
• real estate
• commodities (tangible goods like petroleum, energy, precious metals and agriculture)

An easy way to invest in these different sectors is by investing in index funds. Index funds are mutual funds that are diversified across a particular sector.

For example, there are stock index mutual funds that invest in the 500 largest U.S. companies, closely tracking the performance of the S&P 500. There are bond index mutual funds that invest in a diverse mix of U.S. and foreign government bonds and corporate bonds. And there are real estate index funds that invests in several different REITs diversified across the residential and commercial sectors.

By investing in these types of index funds, not only do you achieve basic diversity across the five major sectors, but the investments within those five funds are also highly diversified. That's called covering your bases.

Now that you've built a diversified portfolio, you need to balance it. Even with diversified mutual funds, some investments are riskier than others. You need to work with your broker to come up with ratios that balance the risk among your investments and that make sense for the goals you established in step one.

For young investors, most of your money will go into stock index mutual funds, perhaps 35 percent in U.S. stocks and 25 percent in foreign stocks. The rest will be split among bonds, real estate and commodities; perhaps 15 percent each in bonds and real estate and another 10 percent in commodities.

The trick is maintaining this balance even as some sectors perform better or worse than others. With dollar-cost averaging, this is actually pretty easy. Let's say that last month your stock index fund performed poorly, but bonds did great. This will temporarily throw off the balance of your portfolio, because bonds will suddenly represent more than 15 percent of the total value of your investments.

Instead of selling off some of your bond investments to bring the ratio back to normal, you need to pump more money into stocks. At first, it sounds strange to invest more in the worst-performing sector of your portfolio. But based on the principles of DCA, you get more shares for your money and keep the average cost of the investment down over the long-term.

In the next section, we'll talk about the importance of sticking to your plan.

NOTE:

This is a purely hypothetical portfolio, not investment advice.

AVOIDING SCAMS

Beginning investors are particularly vulnerable to get-rich-quick schemes and other kinds ofinvestment scams. Here are some ways to protect yourself:

• ­­Stick with established businesses with solid reputations.
• Never invest in anything that promises huge payoffs with no risk.
• Beware of "penny stocks" that are advertised in spam e-mails. They're a form of investment fraud.
• Avoid investment schemes that are based around rare coins, silver and gems. These are favorite targets for con artists.
• ­Don't invest in anything you don't understand. There are some extremely complicated investment instruments out there, but if someone can't take the time to explain the investment to you clearly, then it's not worth it.
• Get everything in writing. Don't take anyone's word for it. A legitimate company will get you everything on paper.
• Trust your gut. If an investment offer seems fishy, it probably is [source: Fraud.org andKiplinger].

Step 6: Stick to Your Investment Strategy

The worst thing a beginning investor can do is to try to predict the future pe­rformance of the market and invest lump sums of money in the next "hot" sector. Between 1998 and 2002, for example, the S&P 500 index grew at a rate of 12.2 percent a year. But during that same period, investors in sector-specific mutual funds received annual returns of 2.6 percent [source: Jenkins].

The only solid investment strategy is a long-term strategy. If you try to time the market -- only buying when you think the market has bottomed out and only selling when you think it's peaked -- you'll have to guess correctly three out of four times to equal the success of an investor who uses dollar-cost averaging over a long period of time [source: Jenkins]. Those are tremendously steep odds, considering that even paid experts are blindsided by completelyunexpected market fluctuations.

The idea is to stick to the plan, even if the plan changes slightly as you get older. The ratios of your portfolio will slowly shift into more conservative investments as you accumulate more and more wealth. When you're ready to retire, you'll have less money in stocks and more money in bonds, because you want to safeguard your money from any last-minute drops in the stock market. When you first started, you had less money to lose and more time to recover from adverse fluctuations. But when you're retired, it's more important to have guaranteed income from low-interest, low-risk investments.

With all this talk of sticking to the plan, don't forget that it's OK to change courses if part of the plan obviously isn't working. For example, say you've had a mutual fund for 10 years and every year it's lost an average value of 3 percent. At this point, it's probably a good idea to shop around for a different mutual fund in the same sector with a better annual performance record. The important thing is to keep these changes to a minimum and be able to tell the difference between a temporary dry spell and an all-out drought. Your broker should be able to help.

For even more information on investing and personal finance, follow the links on the next page.

More Great Links

• Investopedia
• The Motley Fool: Investing Basics

Sources

• Janssen, Cory. Investopedia. "DCA: It Gets You In at the Bottom" http://www.investopedia.com/articles/01/090501.asp
• MSN Money. "A Beginner's Guide to Investing" http://moneycentral.msn.com/investor/beginnerguide.asp?page=introduction
• Jenkins, Richard. MSN Money. "Start investing with just $100" http://articles.moneycentral.msn.com/Investing/StartInvesting/StartInvestingWithJust100.aspx
• Kiplinger.com. "Control Your Risks" http://www.kiplinger.com/basics/archives/2007/08/investing3.html
• Kiplinger.com. "How to Start Investing." August 2007 http://www.kiplinger.com/basics/archives/2007/08/investing.html
• Fraud.org. "Investment Fraud." http://www.fraud.org/tips/internet/investment.htm
• McWhinney, Jim. Investopedia. "Dollar-Cost Averaging Pays" http://www.investopedia.com/articles/mutualfund/05/071305.asp
• Langager, Chad. Investopedia. "Start Investing with Only $1000" http://www.investopedia.com/articles/basics/06/invest1000.asp?viewall=1
• Investopedia. "10 Things to Consider Before Selecting an Online Broker" http://www.investopedia.com/articles/00/112100.asp
• Investopedia. "Advantages of Mutual Funds" http://www.investopedia.com/articles/basics/03/040403.asp
• The Motley Fool. "What Wrong with Full-Service Brokers?" December 21, 2007 http://www.fool.com/investing/brokerage/whats-wrong-with-full-service-brokers.aspx
• Investopedia. "Brokers and Online Trading." http://www.investopedia.com/university/broker/default.asp

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