Meet The Granville Guys
Phil and Norty
| If you have money to invest in the stock market, congratulations.
Put it back in your wallet before you hurt yourself.
The Granville Guys offer the following ten-step investment advice as a public service.
One You do not need a broker. You do not need a certified financial planner. You do not need the advice of anyone who is trying to sell you something.
Two Divide your money into two categories: money you would like to spend in the next five years, and money you do not expect to need for at least five years. Then take twenty percent of the money you do not expect to need for at least five years and put it with the money you expect to spend in the next five years. You never know.
Three Put your short-term (less than five years) money into a money market fund with a large financial services company. Fidelity and Vanguard are two good choices, and there are many others. Money market funds are mutual funds that act like bank accounts, paying market interest (around 4 or 5 percent) [Editor's note: this page was first posted in July, 1999] and offering you check-writing access to your money. The price per share is held stable at $1, so the value of your investment will not fluctuate with market conditions. Money market funds are not insured by the government, however, so for even more safety, you could put all or part of your short-term money in a six-month CD at the bank, and let it roll over every six months unless you need it.
Four Do not buy individual stocks. If you do buy individual stocks, wear a helmet.
Five Get a prospectus and application from a no-load (no sales charge) mutual fund with low expenses, no fees, a low portfolio-turnover rate and a good long-term performance record. Two excellent choices are the Vanguard Total Stock Market Index Fund and the Vanguard 500 Index Fund. These funds are especially good choices for non-IRA money because they don't pay out a lot of dividends and capital gains (on which you will have to pay taxes, even if you are reinvesting the distributions.) If you are investing within a tax-deferred retirement account, another good choice is the Fidelity Dividend Growth Fund.
Six Do not try to time the market. If you do try to time the market, wear a protective cup.
Seven With your long-term money, open your mutual fund account with the minimum investment, (generally under $5,000). Then take the rest of the money you want to invest and divide it by 12. Put one-twelfth of the money into the mutual fund every month for a year (Leave the rest in a money market account). This is called 'dollar-cost averaging.' Your money will buy more shares when the price is low, fewer shares when the price is high. You end up paying a below-average price for the shares and you don't have to think about timing the market. Dollar-cost averaging is a surprisingly effective and stress-free way to make money. People who have sent $100 a month to a good mutual fund for many years have done very well without doing much of anything at all.
Eight Do not tell people you are dollar-cost averaging into a no-load mutual fund. Tell them you're in Yahoo. The conversation will be more interesting and you'll still sleep at night.
Nine Do not sell.
Ten Do NOT SELL.
The Granville Guys do not give interviews, do not give individual investment advice, and do not wish to hear from any more literary agents. If you want to try, you can e-mail them at Guys@ExtremeInk.com.
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