Each semester I try to give my internet students some pearls of wisdom in regards to personal and family finance.

If this were a lecture class, these are some of the items I would definitely cover in class.

1) Remember the one person that is the most interested in your personal finances is yourself. You will hear tons of advertisements about how all of these firms are here to help you, but remember, they are here to help them first. That is one reason you should be taking this course so that you can at least ask the correct questions.

2) Start early..... remember the question in chaper 3 about the twins. One started investing at 25 and the other waited until 35 to begin investing.The twin that started early had alot more money at retirement than the other twin, and the other twin invested $60,000 rather that $20,000.

3) When thinking about life insurance, ALWAYS look at term insurance. Term insurance is the cheapest form of life insurance. When you purchase insurance, you are purchasing protection - not making an investment. You can check one of many internet sources to check prices on term insurance. (google term insurance) Depending on your age and the amount of coverage you desire, you can save hundreds of dollars a year.

For example: A whole life policy can easily cost $300 a month. You can get an entire year of term coverage for $300, and the amount of coverage will be substantially higher.

Insurance salesman do not push term insurance because there is not as much money in it for them. They will also push a policy that builds up cash value. This cash value is a result of you paying more than you should for insurance. ( You want guaranteed renewable term insurance.)

4) Roth IRA - this is an individual retirement account (IRA). Everyone needs to be thinking about retirement - even if you are only in your 20's (remember pearl of wisdom #1). A Roth IRA allows you to invest money that will grow tax free, and you will be able to take it out tax free when you retire. A traditional IRA offers tax deferred growth. Free is best!!!!!

5) Often students ask me about investing in certain stocks. Unless you have a large nest egg, I try to encourage them to invest differently. Think of it like going to the track and watching the horses race. You can bet on one horse, and if it wins, that is great. However, if the horse loses the race and that is likely, you are broke. That is the way that stocks work. Now, if you went to the track and could bet on all of the horses, you are quaranteed to hit the winners and the losers, but at least your chances of winning are better. That is what it is like to purchase a mutual fund.

Maybe by now, you have read about mutual funds in your text. This is the way to invest for the small investor. In fact, you can match your objectives with a fund. Also, you can purchase LOAD OR NO LOAD FUNDS. With a load fund, you pay a sales charge of perhaps 5%. With a no load fund, there is no sales charge. Now think about it for a second. Does a sales charge make the fund do better? NO!!!

Load funds are pushed by brokers because they are getting a sales charge. That is why you hear about them more often. Here is how the funds work. For example, I want to invest $100 dollars a month in a mutual fund. If I invest in a no load (no sales charge) fund, $100 goes to work for me. If I invest in a load fund (with a sales charge), only $95 goes to work for me. Would you rather have $100 or $95 working for you? I know this sounds like a small amount (5%), but it really adds up over time.

It is also confusing because of the advertising of the load funds. They will tell you that their fund grew 20%, but what actually grew 20% was the $95 - not the $100. Also, with mutual funds you want to be aware of the annual expenses. Some funds keep these expenses lower than others. Over time, this is a tremendous advantage for the savy investor.

Finally, I suggest that anyone interested in mutual funds should go to vanguard.com.

This web location has alot of useful information about funds. Most of their funds are no load, and their sales charges are extremely low. I have invested in the Vanguard 500 Index Fund for several years. (No load and very low expenses.)

Also, the best way to invest in these funds is to take advantage of dollar cost averaging. This is in your book, but basically you are purchasing shares/units on a monthly basis. If the prices go up, your $100 (for example) buys fewer shares, and if the price goes down, you $100 buys more shares. This also helps in a volitale market.

6) Finally, I invest in the Vanguard 500 Index Fund in my Roth IRA. That offers me a tax free finvestment return with low expenses and no sales fund. Also, the minimum is reduced if you are investing in a Roth IRA.

If you have any questions about any of these "pearls," let me know. Remember, I will give you good, free advice. Unlike investment advisors, I have nothing to gain by telling you what is best for you.

Good luck, and let me know if you have any questions.

Mike Peek