Getting Started

What's Your Risk Tolerance?

Perhaps the first step in investing is establishing your tolerance for risk - and setting your expectations for returns. If you put $1,000 into a Certificate of Deposit (CD) at the local bank, you'll have about $1,050 in one year. Take the same $1,000 and purchase one or more stocks, you might have nothing (not even one penny!), or you might have $2,000! You want to find the maximum reward for the amount of risk you can tolerate.

Here's some selected links to help you understand the difference between 'savings' and 'investing' as well as establish your risk tolerance level:

• Yahoo! Education Center: CDs: Low Risk, Low Return
• Yahoo! Education Center: What is a Stock, Anyway?
• MSN Money Risk Tolerance Quiz: 20 Questions

Now that you have a broad idea of the difference between a CD and owning a part of a company, and you have an idea of how much risk you can, and are willing to take, the time for a decision has come: