IN-VEST'-ING 1, PUT (MONEY) TO PROFITABLE USE. TODAY'S DEFINITION SHOULD INCLUDE EDUCATION, PATIENCE AND PERSISTENCE, SAY MANY FINANCIAL EXPERTS AND MARKET WATCHERS.Byline: Barbara Correa Staff Writer After ending its losing streak last year with a 20 percent gain, the stock market is sure to attract plenty of new investors heading into 2004. Deciding to enter the market is a great first step. But before laying out cash in the hope of it growing, it's worth investing a little time to learn the basic language of the markets. For individual investors, it's a great time to learn. As part of a global conflict of interest settlement with the Securities and Exchange Commission last year, seven large investment firms will pay $80 million into a fund to promote investor education. The Securities and Exchange Commission said it will announce a specific plan for the fund by the end of January. Part of the money will also go to state securities regulators for local campaigns to promote investment literacy. Meanwhile, there are vaults of free - or at least cheap - information available to prospective investors who want to inform themselves before taking the plunge. The Securities and Exchange Commission's investor education division includes links to several dozen sites that go into exhaustive detail about the various investing vehicles. Most of these organizations, funded by the well-financed securities industry, are eager to share the knowledge. Indeed, the problem for most prospective investors isn't a lack of access to resources, but a lack of time to go through all the information. Groups like the Bond Market Association and National Futures Association National Futures Association (NFA) The futures industry self-regulatory organization established in 1982. are particularly helpful to people who want to go into detail on specific avenues of investing, but there are also scores of more general associations catering to the curious investor. The Investment Company Institute, a trade group made up of investment companies, provides a glossary of terms and briefings on basic investing strategies like dollar-cost averaging dollar-cost averaging Investment of a fixed amount of money at regular intervals, usually each month. This process results in the purchase of extra shares during market downturns and fewer shares during market upturns. on its Web site. The National Association of Securities Dealers National Association of Securities Dealers (NASD) Nonprofit organization formed under the joint sponsorship of the investment bankers' conference and the SEC to comply with the Maloney Act, which provides for the regulation of the OTC market. site has sections on college savings plans and investment scams to avoid. And the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. site includes tutorials on how to read stock tables published in newspapers, how to research a company and how to read an annual report. As for live education, there are plenty of courses and seminars available on the basics of investing. Signing up is half the battle, said Joe Curiel, manager of the education and training department at Consumer Credit Counseling Credit counseling (known in the United Kingdom as debt counselling) is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. This process is actually more debt counseling than a function of credit education. Service of Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , a nonprofit debt counseling organization that offers a monthly course on investing and retirement planning Retirement financial planning refers to a collection of systems, methods, and processes which, in their aggregate, support a family unit's (client's) desire to achieve a state of financial independence, such that the need to be gainfully employed is optional. . ``People have to be congratulated because they're there - they've taken the first step,'' said Curiel, who teaches the course. One of his challenges is to dispel some of the misconceptions his students have about investing when they walk into the class. For instance, some prospective investors are not aware that investment products sold by banks - such as mutual funds - are not insured by the Federal Deposit Insurance Corp. like bank account funds are. Mutual funds, made up of stocks, are subject to the same risks as other investments. Another assumption his students make is that bonds are safe and stocks are risky. ``I say that depends on who issues the bond. The issuing party can go bankrupt. Therefore the term junk bonds,'' he said. But the most common hurdle to successful investing, he said, is investors' own lack of confidence. ``People don't seek information because they feel intimidated. The focus (of the course) is to try to give the person the basic foundation, terminology and concepts so they don't feel too intimidated to talk to a professional.'' That professional might be a bank employee pushing an annuity, or a stockbroker or financial adviser (Curiel stresses that investors should seek out fee-only financial planners or advisers, as opposed to those who are commission-based). A lack of knowledge didn't deter Don Shorkey, an investor in Hacienda Heights Ha·ci·en·da Heights An unincorporated community of southern California, a suburb of Los Angeles. Population: 56,100. and former president of the Los Angeles chapter of the National Association of Investors Corp., a nonprofit group of investment clubs and individual investors. ``None of us knew anything about investing. We were as dumb as we could get,'' said Shorkey, who formed an investment club in 1987 with six of his co-workers at a Nestle warehouse in Loma Linda Loma Linda may refer to:
The group started small, putting in just $10 a month per person. Half the members dropped out shortly after, and Shorkey soon stumbled on the NAIC NAIC See National Association of Investors Corporation (NAIC). , which holds $30, half-day workshops about once a month around Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, . He said his lack of preconceptions about investing and willingness to ask lots of questions helped him learn the fundamentals. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the NAIC, the four basic principles of stock investing are: Invest regularly. Reinvest current income and capital gains and stay invested. Discover and own leadership growth companies. Diversify by industry and company size. But Shorkey has learned a lot more than that over the years. He said the idea that you need to have a lot of money to invest is a myth. The key is continuing to invest a little consistently, even during a down market, when shares are a better buy. In fact, ignoring fluctuations in the markets is a necessity. ``No matter what the market is doing, we're not interested. You're only interested in the companies you own stock in,'' he said. And finally, investing is not a get-rich-quick scheme A Get-rich-quick scheme is a plan to acquire high rates of return for a small investment. Most such schemes promise that participants can obtain this high rate of return with little risk. Most get-rich-quick schemes also promise that little skill, effort, or time is required. . ``This is a lifetime deal,'' he said. ``You don't have to put in huge chunks. Establish goals and work from them. Hopefully it changes the way you think of money.'' Shorkey strengthens his own discipline by having money earmarked for investment automatically deducted from his checking account. And he does all his research for free, without the Internet, using Value Line Investment Survey volumes at the public library. Such back-to-basics habits were considered outdated during the temporary insanity temporary insanity n. in a criminal prosecution, a defense by the accused that he/she was briefly insane at the time the crime was committed and therefore was incapable of knowing the nature of his/her alleged criminal act. that characterized investing in the late 1990s. But it's just that kind of plodding discipline that yields success in investing over time, said David Justman, a senior manager director at Bear, Stearns & Co. and an instructor at UCLA UCLA University of California at Los Angeles UCLA University Center for Learning Assistance (Illinois State University) UCLA University of Carrollton, TX and Lower Addison, TX Extension. ``We went through a period of time when investing became the most popular form of entertainment,'' said Justman, who teaches ``Investments in Personal Financial Planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against : General Principles and Methods'' at UCLA. ``It hit a level of interest we may never see again.'' Since the stock market faltered in the spring of 2000, falling into a three-year bear market, the investing community lost the glitz glitz Informal n. Ostentatious showiness; flashiness: "a garish barrage of show-biz glitz" Peter G. Davis. tr.v. that had attracted speculators looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. quick returns. And even though the market ended 2003 up about 20 percent, those declines have fundamentally changed investors' views. ``We had a disconnect for many years. There was no perceived risk in the market,'' said Justman. Today, expectations of returns are more muted. And that's a good thing for people learning about investing for the first time. ``There's a temptation to try to get rich quickly. I'm in favor of get rich slowly,'' said Justman. ``It's very rare for someone to earn their way to a substantial net worth. You have to invest to net worth.'' Barbara Correa, (818) 713-3634 barbara.correa(at)dailynews.com CAPTION(S): 4 photos, 4 boxes Photo: (1 -- 4 -- color) no caption (Investment guides) Box: (1) ON THE NET (2) stock (3) bond (4) mutual fund |
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