If you are reading this blog then you are one of those few people who took time to think about their finances and do something to make money rather than brooding over how to do it.

Having interest in saving and investing is the first sign that you want to make money and become rich in the process of doing so. It shows that you want your money to work harder for you and generate more income rather than letting them sit idle in some saving bank account earning 1-2% interest.

I didn't know abc of investing when I first saw a book "Investing for Dummies". I happened to walk through the money and finance section of a public library and while browsing through books, each touting itself as the only resource to get rich, I caught a glimpse of the book. I took the book home and read each and every page.

It was a very interesting book and it opened my eyes about time value of money. It showed how through the power of compounding $5 saved today can become $50 in 20-25 years and if I save small amount regularly (using dollar cost averaging) I can be a millionaire when I reach mid 40!!!

Until that time I was hoping to come up with some really innovative startup idea, generate the fund, lead a startup, make it public or get it acquired and make millions of dollars. That was my idea of becoming rich but that was really a far fetched idea. Not everyone becomes a google founder. Reading this book I got an alternate path of becoming rich though slowly but a proven path. I realized that saving consistently and investing the money in stock market and bond market are the ways I can build wealth over time; wealth, which is certain.

After that I read many books on investment including the best from Graham "The Intelligent Investor" and from Peter "Stocks for the long run".

My advice to you - If you don't know anything about investing and you want to start investing and learn more, just open a mutual fund account with Vanguard and enroll in auto investment plan with as little as $50 or $100 investing in the fund every month. You can start with either Vanguard 500 Index or Vanguard Total Stock Market Index fund. These are index funds with very low fee. Index funds are the best way to start investing in a broad market. Index funds have the lowest risk/reward ratio meaning you will have the least risk with average return or market (which ranges from 8-10% over a long period of time).

Once you have opened a mutual fund account read the book "Investing for dummies". This is because your money will be working harder for you while you would be reading the book to understand more about investing.

Also do the followings to get your financial life a boost:

• Invest in your 401(k) - Read more on it here
• Open an IRA or Roth IRA in addition to 401(K) - After contributing as much as possible in 401(k) if you have money invest in IRA or Roth IRA. Roth IRA is suitable if you think that you will be in a higher tax bracket during your retirement.
• Invest in non Retirement Index Fund - After putting money in your retirement account if you still have money to save put them in a taxable mutual fund account choosing an index fund. I have already explained why index fund. Any specialized fund might give you higher return but it comes with higher risks too and in the long run the cost will erode into your profits. Also nobody can beat the overall broad market consistently over a long period of time. Peter Lynch was exceptional. Specialized funds are costly too making them very expensing eroding your returns. Never pay a load (either front or back) and 12-b-1 fee. There are many great funds without any load and 12-b-1 fee so why pay them? Tell your financial adviser to give you no load no 12-b-1 fee fund.
• Don't try to beat the market - If you have just started don't try to beat the market by hand picking stocks and trying to time the market. It takes time, skills, knowledge and experience to pick stocks and become rich. With individual stock you are taking huge risk. You might be sleeping while your money would be evaporated in loss as it has already happened with shareholders of Enron, Worldcom and quite recently those of Bear Sterns. If you think you are the next Warren Buffet then it's a different story.
• Open a saving account in internet banks - Banks like ING Direct and iGoBanking provide very good saving rates compared to brick and mortar banks because of low cost of operations. Your savings are FDIC insured but check with the bank before putting your money. I have my cash savings in ING Direct and I like it's service.
• Go on Autopilot - It's always a good idea to let investment be on auto pilot. Enroll in automatic investing in your mutual fund or automatic savings for your saving account. When you go on auto pilot specified amount of money is automatically taken out of your checking account and used into buying mutual fund or putting into a high yielding saving account. You won't even know and withing couple of years you would have savings you wouldn't even have imagined!

Well I think that's all for now. Please write your comments and if you have any question feel free to ask.