If you are new to investing, or even new to having a job and preparing for the future, what do you do?  There is a lot to learn.  

As a new employee, you may have already been briefed about the 401k plan your company offers.

A 401k helps you prepare for your retirement.  It may seem far too soon to think about that, especially when you are just starting out on your first real job, living on your own, and your expenses seem to exceed your paycheck.  But preparation for retirement begins when you enter the working world.

The most important point is that your employer typically will “match” your contribution to your 401k account, to some degree.

Whatever amount you deposit from each paycheck into your 401k, for up to 6 percent of your total pay (before taxes), your employer will give you a matching amount. That matching amount will be 100%, or 50%, or 25%, depending on your employer.

That is free money.  It is yours, if only you will take it.  Make the smart decision, and put 6% of each paycheck into your 401k!  

You will be asked which mutual funds you would like to invest your 401k money in; that may be something totally new to you.  What do you say?

Some of the funds will be “stable”.  Some will be “more aggressive”.  The economy has turned the corner since April, and is improving.  Choosing the more aggressive options is probably the better choice.

Welcome to your first investments!  

Think of investing as a second job – but it is a job where you are the boss!  Old copies of “Investors Column” are available online, at the Sentinel’s website.  Look them over, and start orienting yourself to the whole field of investing.  

Learn what stocks are.  Learn what mutual funds are.  

An IRA is very similar to a 401k.  If your employer does not offer a 401k, start your own IRA, and begin depositing 6 percent of each paycheck into it.

Start an IRA by visiting a broker.  There are full-service brokers, such as Edward Jones, and discount brokers, such as Charles Schwab.  Both offer help in understanding how to begin investing.

IRAs, like 401ks, contain money that has not been taxed; the money in them is “pre-tax” money.  The IRS expects you to keep the money deposited in an IRA or 401k until you retire, after you pass 59 1/2 years of age.  If you withdraw any of that money before then, you will be charged a penalty fee!  Don’t do it!

Use the money in your 401k and IRA to buy stocks or mutual funds, and make your first investments.

As previous Investors Columns have discussed, learn about companies you might want to invest in.  Study their executive management teams, as well as their financial information.  Your broker can help you obtain that kind of information.

Sometimes a stock you buy will go up; sometimes it will go down.  If it goes down, don’t panic.  Sooner or later, it will come back up.  You have not lost money until you sell a stock for less than you paid for it.  

But sometimes you will realize you have a loser – a company that is in a slow decline.  Then it is time to sell, and re-invest in a company which seems to be growing.

Pay your “tuition” to the University of Hard Knocks, learn your lesson so you do not repeat your mistake, and do better next time.  

You’re the boss.  Learn from others when you can, but make your own decisions.  It is up to you to have the self-discipline to have more winners than losers, and to be a successful investor!

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