Expert: Paul Henneman - 10/11/2008

Question
My husband (age 53) and I (age 60) have a decent retirement income of
$107K annually for the rest of our lives plus about $350K in a diversified
retirement portfolio which we do not yet need to draw on.  We also have
about $120k in a credit union savings account.  I have done some research
on investing online and would like to take $10K of our savings to play
around in the stock market.  Is that too little or too much or should I just
leave it in our savings.

Answer
Anita,
   Thank you for your question! Your timing is good, the markets are very undervalued after having lost so much in the past few months. Overall I think that 10k is too little, you may eventually want to invest two or three times that much. However, I think that the 10k is a great amount to start with. Investing takes time and research, you do not want to risk too much at first. If after a year you find that you are doing pretty well in relation to the overall market, perhaps you could think about adding more.
  Some general guidelines: invest in at least 10 stocks, rather than just one or two. That distributes your risk, as you could really lose almost everything if you put it all into one stock.  Consider index funds such as an ETF or mutual funds based on the S&P500 index. These are funds that track the overall stock index so you do not need to do large amounts of research to buy or sell individual stocks. You can put your money there and let it work. VFINX is an example of a mutual fund that tracks the S&P500.

I hope that this helps! Please do not hesitate to follow up with me if I can be of any additional service,

Best Regards,
Paul

Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com