Saving For College Using Personal Investment Accounts: Managing Your Personal Investment Account

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After you open a personal investment account, you need to figure out what to do with it. Obviously, you'll have to decide for what purpose you're saving and how much you want to save on a regular basis. And then you need to follow through, making sure that money is deposited in the amounts and with the frequency you've determined.

You clearly have other matters to consider here. You must decide what types of investments you're comfortable with and understand how those investments will help you achieve your goals.

Your personal investment accounts and your tax-deferred or tax-exempt accounts differ in two important ways: the level of control you have over your assets and how (and when) the income you earn on your investments is taxed.

Choosing To Hire An Advisor Or Go It Alone

When you place money into a personal investment account, whether it's a savings account, a mutual fund account, or a brokerage account, you retain absolute control over the money and over your investments. You may add or subtract money at any time in the account, and you may completely change investment strategies whenever and wherever you want. You may choose to wing it and invest solely on the basis of your own research, or you can hire someone to do it for you. Literally, all options are open to you.

Because you have almost no limitations, creating an investment strategy, is an important step. An investor who flails about and never clearly identifies any sort of direction is a gambler who almost always loses money.

Do-it-yourself Research

When I was growing up, my father checked his stocks every morning in the newspaper, crowing when they inched up and turning stony-faced when they lost money. Now, of course, you can go through that exercise as many times in the day as you want, thanks to the Internet. Stock and bond quotes are available, at no cost, on a variety of search engines and Web sites. If you already have an Internet brokerage account, you can research an offering and buy some shares on the spot, all in the matter of a few seconds. Snagging a few shares of some hot stock can be incredibly gratifying, especially if you never have to pick up a phone or talk to another breathing body.

The ease with which you can trade in the stock and bond markets doesn't mean that making money in these markets is easy. Take advantage of all the literature available on the Internet, through libraries, and in newspapers; find out how to read the detailed quote pages for various types of investments. Before you ever click on the "buy" icon, check out the earnings reports that are available and make sure that you'll still want to own a piece of this company tomorrow. When you buy on a whim, you generally live to regret it. Do your research first!

Hiring (And Firing) An Investment Advisor

Should you feel uncomfortable investing in anything more exciting than a bank certificate of deposit without first checking with someone else, you may be a prime candidate for the services of a professional investment advisor. An investment advisor can be anyone "your accountant, your lawyer, an insurance agent, a financial planner, or any other person who claims to know how to make money in investments. Remember, however, that because there is no such thing as Investment Advisor School, and because advisors don't need any specific credentials, finding someone to work with can be tricky.