You don’t need to hire an investment advisor in order to invest your savings. I have used the techniques described here for perhaps ten years and I manage well over a million dollars. I’m going to tell you what I do and why. I make no promises. The risk you take is your own. Ready? Here goes…


  • We don’t know what the market is going to do or what the economy is going to do, generally speaking. Neither do investment advisors or bankers or the folks at the Federal Reserve.
  • We do know the current state of the economy, where money comes from, how it flows and how interest rates are set.

First, if you have less than, say, $50,000, don’t worry about investing and instead keep saving. The reason to save money at all is so you have it to spend when you need it for an emergency, for a future purchase or to provide a loan or gift to someone who needs the money worse than you. Having cash that is not at risk may also provide you with a sense of well-being and security. Holding cash also allows you to take advantage of an investment opportunity when it arises. Keep some cash aside even after you have sufficient funds for investment.

When you’re ready to invest, here’s what you do:

  1. Open an account at a discount brokerage (I use TD Ameritrade and I have no complaints, but I also have no experience with others). Deposit the funds available for investing into your brokerage account.
  2. Take about half of your money and buy stock in five or six largish U.S. companies that have been around for a while and pay a decent dividend. Your money should be split almost evenly between the stocks you choose. Stocks that are in the DJIA are fine and you might read about the “Dogs of the Dow” to help you choose. There’s no magic right company. If you want to buy shares in Google or some other large and successful company that doesn’t pay a dividend, fine, but just buy one stock like that. Don’t buy stocks based on some hobby, a tip from a friend, the company you work for or some store you like at the mall. You want the company to make money and give you some of it in the form of dividends. Divide your money about equally between the chosen stocks.
  3. Take the other half of your money and buy long-term government bonds. You can do this by purchasing individual bonds through your broker or you can simply buy a long-term bond fund like TLT. Government bonds are the most liquid investment in existence and in 30 years, you will get your money back. Guaranteed. They’ll also pay interest on a semi-annual basis.
  4. On an occasional basis (perhaps once each quarter), rebalance your account. When you’re done, your cash should be invested, the value of your bonds should be about the same as the value of your stocks and the value of the stock in each company should be about the same.

That’s it. You’re an investor.

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