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As the other post said, you want to start investing as early as possible to get time and the effect of compounding on your side. This is a major factor in the amount you will accumulate by retirement. Set aside a certain amount at established periods such as you do with 401k contributions (dollar cost averaging if you want to look it up on the net). In this way, your steady contributions will even out over market cycles and produce a return generally better than if you had invested in large chunks only every once and a while.

If your going to buy stocks on your own that will require alot more time and work on your part. You should have a diversified portfolio and thus you would need 20 to 25 different individual stocks to elimate company specific risk (you will always be subject to market risk, ie. the economy, etc.) For these reasons, I would invest in a variety of mutual funds taking into consideration factors such as expense levels and loads. If your young, put most of your money in equity and a small amount in bond funds. Your allocation should change and shift to more bonds and less equity as you age. Within these allocation, put a small amount in international equity, some in a small stock fund, some in a large cap fund, some in a bond fund, and the REIT fund mentioned above, in a small amount, would be nice also. The point is that you want diversification, this has been shown to achieve the best returns considering the risk taken.

If you want to have some fun, go ahead and buy individual stocks, but I personnally would stick with mutual funds as my main retirement vehicle - and I work in the financial field for a living and look at this stuff all day long.

You certainly don't need a full service brokerage and the mutual funds you can by direct from the fund company. You might want to think about opening an IRA also.

If you have credit card debt, get rid of that first!
 
I dont have any personal experience investing in REITs but I have done a fair amount of research on them. it is a good concept for those of us who cannot afford or dont wish to incur that level of risk that individual real estate investment contains. However I have been hearing lately that most REITs are not doing too well right now. Of course that could just be a buying opportunity for the smart investor as well.

Each REIT usually has an area of specialization (hotels, commercial, industrial, malls, whatever). It is definitely a good idea to hold some real estate in your portfolio just to balance out some of the market risk. Plus you are holding real property if things do go in the can, rather than a piece of paper.
 

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