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Getting started on an investment plan often looms as one of the more formidable ventures in front of us.

You know you should, but you're not sure how, and you might be worried about missteps in a plan that can have significant impact on your quality of life down the road.

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The results of a good investment plan have never been more obvious. You hear about 401(k) millionaires, people who have invested so well for retirement they'll have a million bucks waiting when they head for Florida.

When your colleagues cluster around the water cooler, they trade tales of investment prowess.

Well, here's some help on launching, then maintaining, your own investment plan, or else finding someone who can supply the expertise.

Ten years ago, Peg Keleher was also reluctant to take the first step. She'd never invested and was sure she didn't know how.

No more.

Today, Ms. Keleher, who lives in Quincy, Mass., just south of Boston, says she's "actually making money" in the stock market.

She is also president of the Massachusetts unit of investment clubs belonging to the National Association of Investors Corp. (NAIC), the same organization that produced the investing guidelines used so successfully by the famous Beardstown Ladies' investment club in Illinois.

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Keleher bought her first share of stock in 1987. It cost her $17 and promptly nose-dived to $2.

But she has two consolations, she says with a mischievous twinkle. The first is that her husband Jack's first foray into investing, with a stock that cost $2 a share, also tanked. To 25 cents!

The second is that the adventure got her started. It was the first step to building an investment plan and, more important, taking control of her financial future.

And as a side benefit, she got her daughter interested in investing, which means she'll be way ahead of most young adults when she enters the job market in the years ahead.

After that first, small loss, the Kelehers decided to learn everything they could about the stock market. They read business books and subscribed to The Wall Street Journal. They set up an investment club for friends and family members.

Keleher's recipe for investment success is simple: "You have to invest a small amount of money in growth-oriented companies on a regular basis." The average individual amount invested in her club each month, she says, is about $40, though younger members, like Peg's daughter, Kathleen, often put in less.

Welcome to the financial world where Wall Street meets Main Street. Thousands of investors have reaped significant profits during the huge stock market run-up of the late 1980s and 1990s. But hundreds of thousands of folks, who have the resources to invest, remain on the sidelines - usually because they don't know how to start a financial plan.

That is particularly true for women, who often lack a basic understanding of finance, says Michelle Smith, managing director of the Mutual Fund Education Alliance, in Kansas City, Mo.

So how do you do what Ms. Keleher did? How do you set up your own investment plan?"

Step 1: You are here...

Look in the mirror: "You have to first know exactly where you are now," in terms of your financial setting, says Gary Schatsky, president of Independent Financial Counselors in New York.

Identify all current income, savings, and expenses. Then determine your discretionary income - subtract your expenses from income - to determine how much you have for the "extras," including investments.

Step 2: Plan for the unplanned

Set aside emergency money, about two or three months worth of expenses, says Muriel Siebert, president of investment house Muriel Siebert & Co. This is money not invested in stocks or bonds or even a certificate of deposit. It needs to sit in a cash account, such as a money-market mutual fund or a savings account.

Step 3: What's important?

Establish priorities: Identify your basic goals, says Ms. Smith. For some people it's retirement. For parents with young children, college tuition looms large. It could be buying a first house in five years. How much will you need to save to meet goals? Prioritize your goals, and organize your investment plan accordingly.

Step 4: What're you waiting for?

Once you've identified your goals and figured out how much money you can afford to invest, jump into the investment pool. Your investment money should be treated as a regular expense, just as integral to your budget as food and rent, says Brian Nowicki, an academic associate at the National Endowment for Financial Education in Denver.

"You must invest on a regular basis," at least once a month, he says. This is what professionals call "dollar cost averaging." Investing regularly reduces average share costs over time. By making constant purchases, you acquire more shares as a security's price drops and fewer as the price goes up.

If you have an inheritance, or substantial savings to work with, you can start with an ample investment. But feed the money into your investments gradually - at regular intervals, monthly or quarterly, up to two years.

"I say to a woman, invest each month at least the amount you spent on your most expensive piece of clothing that month," says Ms. Siebert.

If you have very limited resources and are focusing on stocks rather than mutual funds, "you will have to start by buying just one stock," says Peggy Farley, managing director of AMAS Securities.

"Pick something reasonably safe with upside potential," she says. "Be certain you know what the company is about," says Ms. Farley. "Once you've made a slight profit, use some of your earnings to buy another company, and then another, to provide diversity."

To buy that first stock, you can go to a full-service broker, such as Merrill Lynch, or to a discount broker, such as Charles Schwab & Co. You will pay a larger fee at the full-service house. You might also want to join an investment club.

Be sure to take advantage of tax-sheltered retirement plans: an individual retirement account or your employer's 401(k) or 403(b) plan, Ms. Siebert says. The money you invest there reduces your tax bill; and the profits are not taxed until the money is withdrawn, probably after you have retired, she says.

Next Monday: Starting with mutual funds.

Setting Up An Investment Plan

* Identify your goals. Establish priorities.

* Determine your discretionary spending - income less expenses.

* Set aside some emergency money.

* Pinpoint an initial amount for your investments. Increase it whenever possible.

* Jump in. Buy a stock or mutual fund you can understand.

* Monitor your portfolio.

* Check out two investor-friendly groups you might wish to join:

National Association of Investors Corp.


American Association of Individual Investors


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