THE FIRST STEP

Begin with an understanding of yourself.  What is it you want from your investments?  Are you looking for growth, income or some of both?  No one investment will give you everything you want so think about your objectives.  And don't think short term.  You have to leave your investments in the markets for a long time to get the most from your investment dollar.  Put money in the market that you won't need for at least five years, and preferably, ten.

Remember that all stocks are volatile, but they also represent one of the best investing sectors.  Over the last 77 years, the larger stocks have returned about 12% to investors.  That's an average so some years those stocks went down, but the last few years those stocks have had outstanding perfomances.  So it's easy to get very positive on stocks and point to the great records they've produced.  But those numbers don't tell the whole story because they are averages and include all stocks.  If you think about buying stocks, you won't buy all of them.  You'll buy individual issues.

If you decide you can stand the sudden drops the market will sometimes deliver and want to go into stocks, you might want to consider your first purchase to be a mutual fund.  This will give you professional management of your money and good diversification over many industries.  For help with mutual funds, please see Morningstar.net

If you don't want the volatility of stocks or simply want income, then you'll want to consider buying fixed income investments.  These come in many different varieties, starting with the best first investment you can make: buy a money market fund. You can do this by simply opening a brokerage account, and depositing the minimum required by the broker.  Sometimes this is $2000.  Sometimes it's zero.

Whatever your initial dollar amount to invest, you'll automatically have the money put into a money market fund at your brokerage firm.  It's a great way to earn interest on your money while you learn more about investing.

Next: Buying Stock