What Does It Take To Invest Like a Fool?

You may not yet realize it, but right now you're staring at a ticket to financial independence. That's right, this brief primer might make a big difference in your life, enabling you to retire in your 50s (or 40s, even), send your grandchildren to college, buy that summer place on Lake Whatchamacallit, or fly around the world in a zeppelin emblazoned with your high school nickname. (Hey, "Hot Lips" -- can you hear the violins playing as you float over a herd of wildebeest charging across Ngorongoro Crater?)

You've probably heard of The Motley Fool. But you may not yet know what we're all about and what we can offer you. Let's take care of that first.

Fool co-founders David Gardner, Tom Gardner, and Erik Rydholm came up with a mission and cranked out the first issue of The Motley Fool printed newsletter in July 1993. The Fool debuted online a year later, on August 4, 1994. Their mission was, has been, and will always be to help you to invest for yourself and gain control of your personal finances. We want to help you make smart decisions about your money.

We strive to educate, amuse, and enrich -- all at the same time. We know that most people have never been taught much about finance or investing, and that a glance through The Wall Street Journal or a mutual fund prospectus can be rather intimidating or confusing sometimes. That's how they like it. But you know better (or at least you're going to in just a moment). Learning about financial topics doesn't require a Ph.D., and making good financial decisions doesn't require high-priced helpers.

Tending to your finances isn't as mysterious and complex as you've been led to believe. The professional Wise men on Wall Street, however, would like you to keep thinking it's too difficult for you to do yourself. That way you'll entrust your hard-earned dollars to them, so that they can generate fat commissions for themselves.

Sure, there are some good brokers out there worth the money they charge. But know that most financial advisors aren't paid by how well they manage your investments, but by how often they get you to trade in and out of stocks. Their main job isn't money management. It's sales. And what do you get in return? Sub-par performance and lower returns.

Give us a little time and we'll show you how you can beat Wall Street at its own game. You read that right. Your portfolio shouldn't have much trouble trouncing 75%-90% of professionally managed mutual funds over time.

And now for a hot stock tip....

Just kidding! We don't believe in hot stock tips gleaned from others. We think the person who most has your financial best interests at heart is you. That's right, you're the one who should be making the decisions affecting your monetary future. And you don't need an MBA or a pair of suspenders or a pricey summer home in the Hamptons. You don't even need a stranger's hot stock tip. (FYI: Most of those were cold long before they got to you.) Believe it or not, some fifth-grade math and a dash of horse sense is pretty much all you need to get better returns than most professional money managers.

Once you have a little knowledge under your belt, we suspect you'll find that managing your own money can actually be fun -- you might even want to delve into the world of picking stocks for yourself. The Motley Fool has tools to help you along the way: books, research, online seminars, discussion boards, Fool's School, and even jester caps. (What -- you weren't planning to get your finances in ship-shape without a velveteen jester cap, were you?)

Start with this modest primer. In it we lay out a systematic approach to investing that should benefit novice and seasoned investors alike. We first focus on getting your financial house in order, then move into a discussion of various investment options, and later address more advanced investing topics.

No material presented here should frighten or intimidate you (unless you happen to be frightened by semicolons or puns involving llamas). You don't need any fancy credentials in order to understand anything in here, but that doesn't mean you should jump immediately into the stock market with all your dollars. Ease into investing. Take it one step at a time.

For example, you might want to first move your mutual fund money into an S&P 500 index fund (we'll explain why shortly) and then take a breather while you read and learn more. You may never move beyond that point, but you still would have made a dynamite financial decision. Don't take any action until you're comfortable with what you're doing, though.

Without further ado, let's part the curtains and unveil the Foolish approach to investing.

Creak, creak, creak.

(The sound of curtains being drawn open.)

(Oohs and ahhs from the audience.)

(Someone in row 17 coughs.)

(Someone in row 12 shushes the lady in row 15 unwrapping her butterscotch.)